24 June 2009

Purchasing a Local Company

Foreign investors or expatriates looking to acquire a local company will need to decide how to structure the transaction. There are two basic ways to acquire a local company and I have participated in transactions that have utilized both methods:
  1. Through a stock purchase agreement
  2. Through an asset purchase agreement
There are risks and benefits to each option and knowing which option to choose depends on whether you are the buyer or seller. Naturally both the buyer and the seller will want to structure the transaction in the way the most benefits them. The form in which the transaction is to be structured must be a part of the negotiations.

The seller will most likely be familiar with Argentina law and will want to structure the agreement in a manner that is to their benefit, without consideration as to the buyer's situation. The foreign investor, as the buyer, must be aware of Argentine laws regarding each of the two forms in order to properly negotiate a transaction to their benefit.

I will analyze both the legal and tax considerations of each option in a posts over the next two days.

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