Mergers and acquisitions (M&A) can be tricky transactions, a delicate dance between buyer and seller that must be choreographed in minute detail. This requires contemplation of a multitude of issues at the outset, many of which must be addressed as early as the letter of intent stage. Below are some of the top issues that should be decided upon as early as possible in the M&A process, as doing so is paramount to a successful transaction.

An asset purchase agreement ("APA") is the heart of an acquisition, the document where the terms of the deal are struck. The terms of an APA will impact, among other things, the actual cost to the buyer, the amount received by the seller and the parties' obligations to each other for possibly years after the consummation of the sale. This post will begin a discussion of the various provisions of an asset purchase agreement and how the terms agreed to can favor one party to a transaction over the other, beginning with a brief look at terms that concern assumed and excluded assets and liabilities.

As discussed in prior posts, an asset sale transfers only the assets of the business, whereas a stock sale transfers some or all of the ownership interest in the business as well as its obligations and liabilities. In this continuing examination of how to structure a business sale, the next points of consideration are the tax consequences of each transaction and ways they can affect the buyer and seller. These types of structures confer different tax benefits or burdens on each party, so tax treatment is one of the most crucial elements in the sale.

Prior posts discussed the basic advantages and disadvantages of structuring a sale of a business as a stock sale or an asset sale, as well as the initial considerations in agreeing to structure a sale as an asset purchase. This series will continue to expand on these types of sales with the next step in the process, the documents by which these sales begin.

When purchasing or selling an existing business, both the buyer and the seller must determine whether it is advantageous to structure the transaction as a sale and purchase of the assets of a business ("asset sale") or of the ownership interest of the business (a "stock sale"). Understanding the basic differences between the two is the first step to structuring a deal that is most beneficial to you, whether you are the buyer or the seller.