IAG is pleased to announce the acquisition of its client J.T. Smith & Associates, Inc. on May 10, 2018. Based Urbana, IL, the company provides custom software to support businesses and distributors attending annual trade shows. Nearing retirement at 70 years of age seller wanted someone to carry on his legacy, and transition into part time while helping the buyer for a year and then travel. The business was sold to Vipin Verma who wanted to purchase a software company near Chicago. Buyer had no experience with trade show software automation systems. After he was introduced to this hybrid sector and got to loving the excitement of the shows and unique aspects of the software company, he purchased!
IAG is pleased to announce the acquisition of its client Access Overhead Door, Inc. on May 1, 2018. Based in Kennedale, TX, Access Overhead Door has specialized in selling, installing and servicing commercial industrial overhead doors. The business was sold to a private investor, who was national sales manager in his early 50’s. He was seeking a profitable, well organized business that could be developed into, and replace his multiple six figure salary. Access Overhead Door provided a well-run, long profitable history with lots of growth potential.
IAG is pleased to announce the acquisition of its client Huser Fire Fighting Equipment on April 3, 2018. Headquartered in Portland, OR the company has been a leader in the fire protection sector. Focusing on offering sales, installation, testing, and service of fire safety equipment and fire suppression systems for commercial, industrial, and marine customers. The business was sold to a private investor.
IAG is pleased to announce the acquisition of its client Hillside Beekeeping Supplies on March 5, 2018. Headquartered in Merrimack, NH the company has been in business for over 20 years selling packaged honey, honey candy, and honey-based skin care and health-based products. The business was sold to Miles Apiaries who saw Hillside Beekeeping as a way to into the northeast area.
IAG is pleased to announce the acquisition of its client Signal Sign Co. on January 10, 2018. Headquartered in Livingston, NJ the company has been in business for over 60 years, providing a wide range of custom built interior and exterior signs. The owner was motivated to the sell the business to begin retirement. The business was sold to CGE Inc, who saw the company as a strategic acquisition.
IAG is pleased to announce the acquisition of its client Action Paving, Inc on February 28, 2017. Based in Vancouver, WA Action Paving, Inc. has completed thousands WA asphalt and concrete projects. The business was acquired by Montlake Capital in Seattle, WA who focuses on industry sectors where we have deep domain expertise, including consumer and business products and services, financial services and technology.
IAG is pleased to announce the acquisition of its client Latham Stairs & Millwork, Inc. on March 31, 2017. Based in Sanger,TX Latham Stairs & Millwork has been manufactures high quality stair parts, mantelpieces, wood turnings and cedar products for many years. The business was acquired by Concierge Renovation Company, Inc.
The following article is from one of IAG’s partnering groups, AxialMarket.
When you sell your company, it’s possible, even likely, that some liability originating from the period of your ownership will befall the new owner who buys your company.
This creates for a sticky issue when you are negotiating the terms of the purchase and sale agreement in an M&A transaction. Neither party wants to assume any liability post-transaction, and the buyer will do everything they can to protect themselves against any assumed liabilities, which include, but are not limited to product, contractual, tax, and environmental liability issues. To avoid post-transaction litigation, it’s important to identify all knowable liabilities and clarify specifics around who is assuming what when drafting the purchase agreement.
In general, when the sale is structured as an asset sale, the buyer does not assume liability, whereas if it is structured as a stock sale, they do assume at least some amount of liability.
Regardless of how the sale is structured, the development of Successor Liability Laws has defined the situations when a buyer is always responsible for the liability of the previous owner, under any and all circumstances.
The Successor Liability Exceptions are:
Continuation: If the sale of the company is a continuation of the original company, the buyer can assume liabilities. Depending on which state litigation occurs, what defines a continuation can be interpreted very broadly or narrowly. Characteristics of a continuation include ownership of assets, continuation of the company officers and their roles, and inadequate consideration paid for assets.
De facto Merger: Technically speaking, a merger differs from a continuation, but in terms of successor liability, they share similar characteristics. In addition to the factors mentioned under continuation, the courts can also look to see whether operations or the physical location are the same, whether the new owner maintains the company name, and whether or not public perception has changed.
Assumed Liability: In this instance, the buyer chooses to contractually assume specified liabilities from the seller.
Fraudulent Transfer: If a seller sells the assets of its business with the intent to defraud creditors, they continue to assume liability for the company.
When selling your company, you should consult an attorney to fully understand what measures you should take to negotiate liability. Negotiations over the assumption of liabilities is usually a give and take but also can surface some real dealbreakers, so during the negotiation stage of the M&A transaction, keep the following in mind:
In the purchase agreement, clearly define to what extent the buyer should assume liability under different circumstances.
Make sure you indicate a resolution for liabilities not stipulated in the purchase agreement.
Understand your liability if you plan on continuing with the new company, either in a consulting, executive or board position.
Be sure to take into consideration how the company is paid for (cash, stock, debt), as it can impact who assumes responsibility for certain liabilities.
By assuming any post-transaction liability, you reduce the risk for the acquirer, which can impact the purchase price. An experienced buyer will often uncover much of the liability risk during due diligence, which will help avoid post-transaction complications. Moreover, a good M&A Advisor will help you navigate and negotiate your rights as a seller.
By Jamie Romero