13 Aug Essential Strategies for Buying a Company: Shares vs. Asset Acquisition

Strategies for Buying a Company: Key Considerations

In the business world, opportunities to acquire companies and their ongoing operations frequently arise. The attractiveness of these opportunities depends largely on the financial and legal realities uncovered through due diligence or audit processes.

Acquiring a company or gaining control of it can be achieved through various methods, including purchasing shares, acquiring assets, mergers, obtaining a control package, spin-offs, and global asset transfers. In the Dominican Republic, the most common methods are the acquisition of shares or assets. The choice between these options depends on the operation’s characteristics, circumstances, and the interests of the involved parties.

Purchasing a company through its shares is often less complex and faster to complete since it only involves the transfer of share ownership as an asset. Conversely, acquiring assets—an “asset deal”—requires transferring each asset within the company, obtaining consents from third parties, and involving public entities. However, an asset purchase offers the advantage of negotiating with a single party, unlike share purchases that require negotiations with multiple shareholders.

While both methods are widely used, there is a growing preference for asset acquisitions due to two key factors: First, buyers can choose what they want to acquire, a process known as “Cherry Picking.” Second, the buyer avoids inheriting hidden contingencies that the company might be facing, avoiding potential legal complications. Nonetheless, share purchases remain appealing for their simplicity.

For buyers, a critical aspect of structuring these operations is the proper configuration of acquisition contracts to minimize risk exposure, ensure guarantees, and limit liability.

Ready to take the next step? Contact our experienced legal team at Segura Abogados today to navigate the complexities of company acquisition and safeguard your investment. We’re here to help you make informed decisions and secure a successful transaction.