Corporate
Corporate Tip 4: Private Mergers & Acquisitions
Part 1: Common deal structures
Share and asset transactions are two common types. In share transactions, the purchaser acquires ownership of the target company along with all its assets, liabilities, contracts and legal obligations. Due diligence is crucial to uncover any undisclosed liabilities that might devalue the target's asset value. This type of transaction is relatively straightforward as it only involves the transfer of ownership of the company's shares.
Asset transactions allow the purchaser to selectively acquire specific assets and liabilities, providing the advantage of cherry-picking desired assets. However, this method involves administrative complexities. A company's assets may include land, stock, intellectual property and machinery and each necessitates a different transfer process. Additionally, the tax implications differ between asset and share sales.
A less common alternative is statutory amalgamation under Section 215A of the Companies Act 1967, where a purchaser, if a Singapore company, can merge with a target Singapore company to form an enlarged amalgamated company. This method is typically used to facilitate mergers between related companies.
Read more about the legal framework and considerations for a simple vanilla transaction under Singapore law to acquire a private limited company in SAL’s M&A Transaction Guide on https://www.lawnet.com/guides/id/111276/mergers-and-acquisitions-transaction-guide?ref=p-gc.
<< Back to Junior Lawyers Professional Certification Programme
|
|
