Asset acquisition is a buyout strategy that focuses on acquiring control of specific assets or stakes in a company, rather than trying to gain control of the company itself. This strategy is commonly used to gain control of assets of a bankrupt company or to establish a business with a ready operating facility. It allows buyers to choose attractive assets without assuming any liabilities or negative factors associated with the current owner.
As one of the most common examples of buyout strategies in use today, an asset acquisition focuses on acquiring control of one or more assets of a company, without necessarily planning to control the company itself. In general, this involves going after specific assets or stakes in the company, rather than trying to gain control of the assets by purchasing a majority amount of the shares issued by the company. These are some examples of when an asset acquisition may be the most productive way to acquire assets currently under the control of another company.
One of the most common uses of the asset acquisition model is to gain control of the assets of a company that is bankrupt or about to file for bankruptcy. Because the company’s financial stability prevents it from being attractive to investors, the focus will be on creating some source of income by selling assets that are not directly involved in the company’s operations. For example, a real estate company that focuses on leasing corporate offices may need a quick cash injection to avoid bankruptcy. One of its assets is a residential apartment complex. Since the apartment complex is not a central component of its business model, an outside investor may choose to make a fair offer for ownership of the apartments. The investor does not tie up funds in the shaky financial affairs of the real estate company, but purchases an asset that is considered desirable.
Another instance where this type of buying strategy may be attractive is when an investor wishes to establish a business with a ready operating facility. In this scenario, the investor may approach a similar company that is not as financially stable as it once was, and purchase an entire operating plant and its contents. The end result is an instant production facility that is already fully equipped and ready to process goods. In many cases, the facility’s employees are given the opportunity to remain in their current positions, just under the new ownership. This type of asset acquisition strategy effectively removes a viable manufacturing operation from the ownership of a failing company and places it under the auspices of an organization that will be able to make good use of resources.
Asset acquisition allows buyers to choose which assets are attractive, without having to assume any of the liabilities or deal with any of the negative factors associated with the current owner. In some cases, using this strategy can often mean not only the start of a new business for the buyer, but also a second chance at regaining financial stability for the seller.
Smart Asset.
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