Buying a company, merging with another business or acquiring a competitor is a legal transaction and a financial one at the same time. Justin Esshaki is an Attorney and a CPA, so the deal structure, the due diligence and the purchase agreement are handled by someone who reads both the contract and the financial statements.
For small and mid-sized businesses, an acquisition or merger is often the fastest way to grow: adding customers, locations, people or capabilities in a single transaction. It also brings risk. Liabilities you did not know about, financial statements that do not hold up, and a structure that costs more in tax than it should are the problems that turn a good deal into an expensive one.
Whether a transaction is an asset purchase, a stock or membership interest purchase, or a merger affects which liabilities come with the business, how the price can be depreciated or amortized, and what each side pays in tax. These choices are best made early, before the letter of intent sets expectations.
Legal due diligence asks what the company has agreed to: contracts, leases, employees, licenses and disputes. Financial due diligence asks whether the numbers are real: revenue, margins, working capital, debt and tax exposure. Because Justin is a CPA as well as an attorney, both reviews are coordinated, and what one turns up informs the other.
Closing is not the end of the work. Combining entities, updating agreements, transitioning employees and aligning accounting and tax filings all need attention so the acquired business performs as planned.
Comparing asset purchases, stock or membership interest purchases and mergers for their legal and tax consequences.
Negotiating price, structure, exclusivity and key terms before you commit.
Reviewing contracts, leases, employment matters, permits, litigation and corporate records.
Examining financial statements, quality of earnings, working capital, debt and potential tax exposure.
Drafting and negotiating representations, warranties, indemnification, escrows and closing conditions.
Allocating the price among asset classes to support depreciation and amortization after closing.
Structuring seller notes, earnouts and other contingent payments, with their tax treatment in view.
Combining entities, assigning contracts, updating governing documents and aligning tax filings.
Legal and financial due diligence are run together, so a contract issue is checked against the numbers and the numbers are checked against the contracts.
Each structure is compared by its after-tax cost and the liabilities it carries, not just the headline price.
Working capital adjustments, earnouts and indemnities are drafted by someone who understands the financial statements behind them.
Define your goals, budget and preferred structure before negotiating.
Agree on price, structure and key terms, with tax consequences modeled in advance.
Complete legal and financial due diligence and negotiate the definitive agreement.
Close the transaction and integrate the business, contracts and tax filings.
Buyers often prefer asset purchases because they can leave many liabilities behind and may receive a stepped-up tax basis for depreciation. Sellers often prefer stock sales. The right structure depends on the business, its liabilities, any licenses or contracts that cannot easily be transferred, and the tax outcome for both sides.
Due diligence is the investigation a buyer performs before closing. It covers legal matters, such as contracts, leases, employees and disputes, and financial matters, such as revenue, expenses, debt and taxes. Its purpose is to confirm the business is what the seller says it is.
Many purchase agreements set a target level of working capital the business must have at closing. If actual working capital is above or below the target, the price is adjusted. How the target and the calculation are defined can significantly affect the final price.
In an acquisition, one company buys another, either its assets or its ownership. In a merger, two companies combine into one legal entity under state law. The choice affects liabilities, contracts, taxes and the paperwork required.
Yes. Many small business acquisitions use bank or SBA financing. We coordinate the purchase agreement and closing with the lender’s requirements.
Yes. For owners selling their company, see our Selling a Business page, which covers preparing for a sale and keeping more of the price after taxes.
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