Jul 07, 2022
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Liability: With an asset sale, the Buyer's Job Function Email List liability is limited. The Buyer is purchasing some or all of the assets and has the option to identify any liabilities they are interested in assuming. Under a stock sale, the Buyer purchases the stock of the company and assumes Job Function Email List all liabilities (known, unknown, contingent or otherwise). Assignment of Contracts: Most businesses have contracts in one form or another. The Job Function Email List most common are commercial real estate leases, contracts involving Job Function Email List business relationships, and contracts with employees. An asset sale transaction involving the assignment of these Job Function Email List contracts requires considerably more work and has a potentially a different outcome than a stock sale. Contracts need to be evaluated to determine if they Job Function Email List permit an assignment without consent. Should they not permit assignment without consent, third party consent will need to be obtained. In stock sale transactions, the legal entity that is the party to the contract continues, Job Function Email List and the general rule is that the contract remains in force between the original parties. (No consent to assignment is needed as assignment typically does not occur). There are exceptions, as some Job Function Email List contracts stipulate that a change in ownership of the business will be considered an assignment of the contract. If such Job Function Email List a 'change of control' clause exists in the contract, the same issues will arise as with an asset transaction. Performing due diligence and having legal counsel thoroughly review all of the company's contracts will be critical to determine the available options. 2. Covenant Job Function Email List Not to Compete (CNTC) A covenant not to compete (CNTC) is a contractual condition by which the seller promises to refrain from conducting business or professional activities of a nature similar to those of the business being sold.