SPAs can also be considered invalid if fraud, fraud or compulsive. If z.B. the nature of the actions is misrepresered, it can open the seller to litigation. The sale of shares is often preferred by the owners of a sales company, because in general, all known and unknown liabilities of the business are transferred to the buyer and the sellers therefore avoid permanent exposure to such liabilities (unless explicit agreement with the buyer). Buyers often object to a share sale transaction, unless the business to be acquired has its own operating history or there are significant practical difficulties in carrying out an asset sale, such as restrictions on the transfer of certain assets of the entity selling to the purchaser or the incriminating third-party consents necessary for the transfer of assets. Since the target entity is simply changing ownership, the target`s assets remain unchanged when buying shares and most third-party transfer and consent procedures that could cause complications or delays in acquiring assets can be avoided. However, the purchase of shares involves a « change of control, » so the buyer must identify contracts requiring consent. For example, many leases contain « change of control » provisions that require the landlord`s approval. Summary: A merger means that two companies are literally grouped into one entity. With respect to the most common type of merger (a reverse triangular merger), the buyer will create a new 100% subsidiary (often called « Fusion Sub ») that merges directly into your business, the merger part having disappeared as a full-fledged legal entity at the end of the merger. The result will be that the buyer owns 100% of the merged entity (the « surviving entity » which, from the corporate`s point of view, is your original company) and that the selling shareholders will receive a deal payment. In the event of a merger, two companies form a legal entity, with the shareholders of the target company receiving shares from the purchaser, cash or a combination of the two. The surviving entity supports all assets, rights and liabilities of the company extinguished by application of the law.
Mergers are often structured as « triangular, » with the buyer using a subsidiary (usually a new entity) merged into the target entity (an inverted triangular merger) or in which the target entity merges (a triangular merger at the front).