Sandstrum Law Client checklist/questionnaire for asset purchase.
A. The Parties
1. Full Legal Name of the Company whose assets are to be Acquired (the “Seller”): [name]
2. State of Incorporation of Seller: [state]
3. Name and Address of Purchaser (the “Purchaser”):
[name]
[address]
4. Will Purchaser Use a Subsidiary to Acquire the Seller’s assets? □ Yes □ No If so:
a. State of Incorporation of Subsidiary: [state]
b. Names and Addresses of Directors and Officers of Subsidiary: [names], [addresses]
c. Names and Addresses of Subsidiary’s Shareholders (if less than wholly owned by Purchaser): [names], [addresses]
B. Structure of Transaction
A. The Parties
1. Full Legal Name of the Company whose assets are to be Acquired (the “Seller”): [name]
2. State of Incorporation of Seller: [state]
3. Name and Address of Purchaser (the “Purchaser”):
[name]
[address]
4. Will Purchaser Use a Subsidiary to Acquire the Seller’s assets? □ Yes □ No If so:
a. State of Incorporation of Subsidiary: [state]
b. Names and Addresses of Directors and Officers of Subsidiary: [names], [addresses]
c. Names and Addresses of Subsidiary’s Shareholders (if less than wholly owned by Purchaser): [names], [addresses]
B. Structure of Transaction
1. Assets of Seller to be acquired (the “Assets”):
a. Cash: ________ dollars ($________)
b. Accounts receivable: [amount]
c. Inventory: [inventory]
d. Machinery and Equipment: [specify]
e. Real Property:
i. Fee: [fee]
ii. Leasehold: [leasehold]
iii. Other: [specify other]
f. Intellectual Property: [property]
g. Trade Names: [name]
h. Computer Software: [specify software]
i. Other Intangible Property (describe): [property]
j. Goodwill: [specify]
2. Consideration to be paid by Purchaser for Assets:
a. Cash: ________ dollars ($________)
Seller’s Note: ($___________)
b. Shares of Purchaser or Subsidiary: N/A
i. Number of Shares: [number] N/A
ii. Type of Shares (Common/Preferred): [specify type]
iii. Par Value of Shares: [value]
iv. Other property (describe): [description]
c. Royalty on Future Sales (if so, describe terms)?: [terms]
3. Is Purchaser assuming any liabilities of Seller?
a. If so, all liabilities other than “excluded assets”?
b. If so, only scheduled liabilities?
4. Allocation of Purchase Price:
a. Amount Allocated to Tangible Property: [amount]
b. Amount Allocated to Intangible Property: [amount]
c. Need to File IRS Form 8594?
5. Is Purchaser financing all or any portion of the purchase price? □ Yes □ No If so:
a. Name and Address of Lender: [name], [address]
b. Amount borrowed: [amount]
c. Interest rate: [rate]
d. Collateral security: [security]
e. Guaranty by Purchaser’s shareholders or other third parties: [guaranty]
f. Other terms and conditions (counsel should obtain a copy of the Commitment Letter or Letter of Intent issued by the Lender): [terms and conditions]
g. Expiration of Lender’s Commitment: [date]
6. Any escrow or adjustment of purchase price (describe)? [description]
7. If any portion of the purchase price is to be deferred: I.e. Promissory Note
a. Portion deferred: ________ dollars ($________)
b. Period of payment: [period]
c. Interest rate: [rate]
d. Security interest in Assets? [security interest]
e. Security interest in other property of Purchaser? [security interest]
f. Guaranty of Purchaser or Purchaser’s shareholders? [guaranty]
C. Terms of Covenant(s) Not to Compete:
1. From Seller? [terms]
2. From Seller’s Principals? Which ones? [specify]
3. Duration of Restriction: [duration]
4. Geographical Restriction: [restriction]
D. Due Diligence of Seller
1. Overview of Business
a. If applicable, registration statements filed with the SEC and/or any offering circulars.
b. If applicable, applications filed with any national securities exchanges.
c. If applicable, proxy statements and letters to shareholders.
d. Private placement memoranda.
e. Copy of Company minute books for Company and all subsidiaries and all predecessor corporations. Please include all documents relative to any reorganization and all charter documents and bylaws.
f. Classes and series of capital stock, showing for each the number of shares authorized, issued and outstanding, par value (if any), rights of shareholders and copies of all stock certificates, including those of subsidiaries.
g. Names of directors and their affiliation with Company.
h. Name, address and phone number of Company’s independent accountants and name of partner in charge of account.
i. Name, address and phone number of any brokers connected with the sale of the Company and a copy of any such broker contracts.
j. States and countries where Company sells products/services.
k. List of subsidiaries.
2. Assets
a. Copy of any appraisals of machinery and equipment.
b. Copies of all lease/rental agreements for personal property.
c. Schedule of owned real property, including location, description of any encumbrances on the property, copy of recent title insurance policies or commitments, copies of deeds and any recent surveys.
d. Copies of any appraisals for real property.
e. Schedule of leases for real property, including location and copy of lease.
f. Location of material assets not located on Company’s premises (e.g., tools, dies, blueprints, computers).
g. Schedule of all U.S. and foreign patents, trademarks, service marks, tradenames, copyrights, brand names, trade secrets or other proprietary information (including inventions, processes, know-how and formulas), including name of record owner, description of any registrations or applications for registration, licensing agreements or other agreements pursuant to which Company uses the property or permits the use of the property by others, royalties received or incurred, and any infringement action or challenges to ownership pending or threatened.
3. Labor Matters
a. Description of composition of work force, including Union affiliation and wage and benefit packages, including (a) copies of any labor contracts; (b) description of pending or threatened grievance proceedings, disputes or labor litigation; (c) description of charges of any unfair labor practices, EEOC violations or labor law violations; and (d) work stoppages.
b. Details of any violations, citations or allegations regarding the failure to comply with any environmental regulations of OSHA or similar employee health and safety laws and regulations.
c. All side agreements, local understandings having a current impact.
d. All Settlement Agreements having a current impact.
e. All arbitration awards and grievance resolutions having a current impact.
f. Ten (10) years strike history and related documents.
g. Documentation regarding organizational attempts for the past five (5) years.
h. All NLRB documentation for the past five (5) years.
i. All department of labor documentation for the past five (5) years.
j. All personnel policies.
k. All employee handbooks.
l. All affirmative action plans with current status reports.
m. All audit reports of OFCCP.
n. All compliance agreements, letters of commitment or conciliation agreements entered into with any agencies.
4. Products
a. Copies of all brochures and catalogs used in the sale of products by Company.
b. Copies of all warranties of products given with sale.
c. A description of product liability considerations, including Company’s historical experience, details of any product liability insurance carried (including amounts of coverage and term), and details of any product liability litigation.
d. Approvals, authorizations or certifications obtained from industry associations or Underwriters Laboratories, and any requisite consents to transfer the same.
5. Credit Agreements
a. Term Loan/Revolving Credit/Line of Credit Agreements.
b. Bonds, notes and debentures.
c. Guaranties, contracts of indemnity or suretyship.
d. Mortgages, pledge agreements, deeds of trust, title retention agreements.
e. Grants by the Company of security interest in its property or security interest held by the Company in the property of others.
f. Security Agreements.
g. Financing Statements, continuation statements, fixture filings.
h. Letters of credit.
i. Lease purchase agreements.
j. List of receivables from related parties.
k. Any other material financing arrangements.
6. Employee Benefit Plans and Employment Agreements
a. Pension or Profit-Sharing Plans, including IRS determination letters, IRS Form 5616 and most recent IRS Form 1500.
b. Peferred Compensation Plans.
c. Stock Option Plans and Bonus Plans.
d. Incentive Compensation Plans.
e. Life Insurance Plans.
f. Medical and Disability Plans.
g. Other plans, agreements or arrangements.
h. Employment, Non-Competition and Consulting Agreements
i. Confidentiality Agreements.
j. Severance Agreements or arrangements.
k. Employee benefit booklets, including Summary Plan Descriptions for Plans (pension and welfare).
l. The two (2) most recent actuarial reports and accountant’s reports on all plans.
m. List of assets of each Plan at most current available market value.
7. Insurance
a. Schedule of insurance indicating type of risk, amount of coverage, insurer, insurance broker, deductibles, premium and term.
8. Other Contracts, Agreements and Arrangements
a. Franchise Agreements (Company as franchisee or franchisor).
b. License Agreements.
c. Joint Venture/Partnership Agreements.
d. Agency Agreements.
e. Performance bonds.
f. Customs bonds.
g. Powers of attorney.
h. Agreements restricting the conduct of the Company or its business.
i. Letters of intent.
j. Dealer or Reseller Agreements.
k. Agreements with Foreign and Domestic Sales Agents and Sales Representatives.
l. Consulting Agreements.
m. Service Agreements.
n. Installment Sales Agreements, Conditional Sales Agreements.
o. Forms of purchase orders and sales orders.
p. Consignment Agreements.
q. Contracts with advertising/public relations agencies.
r. Research and Development Contracts.
s. Contracts with federal/state/local government or agencies.
t. Shareholder Voting Agreements or arrangements.
u. Copies of letters received by auditors for the most recent fiscal year.
v. Any other material agreements.
9. Litigation
a. Pending or threatened lawsuits.
b. Pending or threatened investigations or proceedings before governmental or regulatory entities.
c. Pending or threatened arbitration proceedings.
d. Consent decrees, judgments, orders, injunctions to which Company is subject.
10. Government Compliance
a. Permits, authorizations, registrations, licenses or qualifications necessary for the conduct of the Company’s business (including qualifications to transact business as a foreign corporation in various states).
E. Documents Required to Close Transaction:
1. Asset Purchase Agreement:
a. Long Form (detailed representations and warranties): [long form]
b. Short Form: [short form]
2. Letter of Intent: [letter]
3. Instruments of Transfer for Assets:
a. Bill of Sale: [bill of sale]
b. Assignment of Lease: [assignment]
c. Deed of Real Property: [deed]
d. Assignment of Patents, Trademarks, Copyrights, Licenses: [assignment]
4. Covenants Not to Compete:
a. From Seller: [covenant]
b. From Seller’s Principals: [covenant]
5. Bulk Sales Filings (if required by state law for sale of inventory): [filings]
6. Releases:
a. UCC-3 Termination Statements: [statements]
b. Mortgages on Real Property: [mortgages]
c. Other Creditors (e.g. judgment liens, tax liens): [specify]
7. Check for Cash Portion of Purchase Price: [check]
8. Bill of Sale from Purchaser (if Tangible Property is part of Purchase Price): [bill]
9. Share Certificates of Purchaser (if Purchaser’s stock is part of Purchase Price): [certificates]
10. Stock Powers for Purchaser’s stock (if Purchaser’s stock is part of Purchase Price): [powers]
11. Promissory Note for Purchase Price: [note]
12. Security Agreement in Assets: [agreement]
13. UCC-1 Financing Statement: [statement]
14. Guaranty of Purchaser: [guaranty]
15. Guaranty of Purchaser’s Shareholders: [guaranty]
16. Secretary’s Certificate of Seller: [certificate]
a. Certificate of Incorporation: [certificate]
b. Bylaws: [bylaws]
c. Certificate of Good Standing (state of incorporation): [certificate]
d. Certificates of Good Standing (each other jurisdiction where Seller is qualified as a foreign corporation): [certificates]
e. Authorizing Resolutions of Seller (must have 2/3 vote of shareholders in some states): [resolutions]
17. Secretary’s Certificate of Purchaser: [certificate]
a. Certificate of Incorporation: [certificate]
b. Bylaws: [bylaws]
c. Certificate of Good Standing (state of incorporation): [certificate]
d. Certificates of Good Standing (each other jurisdiction where Seller is qualified as a foreign corporation): [certificates]
e. Authorizing Resolutions of Purchaser: [resolutions]
18. Officer’s Certificate of Seller (Representations and Warranties True as of Closing Date): [certificate]
19. Officer’s Certificate of Purchaser (Representations and Warranties True as of Closing Date): [certificate]
20. Opinion of Counsel to Seller and Selling Shareholders: [opinion]
21. Opinion of Counsel to Purchaser: [opinion]
22. Filings with Government Agencies:
a. Hart-Scott-Rodino: [filing]
b. U.S. Commerce Department (if foreign investment): [filing]
c. Environmental: [filing]
d. Alcoholic Beverages (if liquor permit): [filing]
e. Licensing Authorities (if regulated business or professional practice): [filing]
23. Required Consents of Other Third Parties:
a. Lenders to Seller: [consent]
b. Other Creditors: [consent]
c. Landlord: [consent]
d. Government agencies: [consent]
a. Cash: ________ dollars ($________)
b. Accounts receivable: [amount]
c. Inventory: [inventory]
d. Machinery and Equipment: [specify]
e. Real Property:
i. Fee: [fee]
ii. Leasehold: [leasehold]
iii. Other: [specify other]
f. Intellectual Property: [property]
g. Trade Names: [name]
h. Computer Software: [specify software]
i. Other Intangible Property (describe): [property]
j. Goodwill: [specify]
2. Consideration to be paid by Purchaser for Assets:
a. Cash: ________ dollars ($________)
Seller’s Note: ($___________)
b. Shares of Purchaser or Subsidiary: N/A
i. Number of Shares: [number] N/A
ii. Type of Shares (Common/Preferred): [specify type]
iii. Par Value of Shares: [value]
iv. Other property (describe): [description]
c. Royalty on Future Sales (if so, describe terms)?: [terms]
3. Is Purchaser assuming any liabilities of Seller?
a. If so, all liabilities other than “excluded assets”?
b. If so, only scheduled liabilities?
4. Allocation of Purchase Price:
a. Amount Allocated to Tangible Property: [amount]
b. Amount Allocated to Intangible Property: [amount]
c. Need to File IRS Form 8594?
5. Is Purchaser financing all or any portion of the purchase price? □ Yes □ No If so:
a. Name and Address of Lender: [name], [address]
b. Amount borrowed: [amount]
c. Interest rate: [rate]
d. Collateral security: [security]
e. Guaranty by Purchaser’s shareholders or other third parties: [guaranty]
f. Other terms and conditions (counsel should obtain a copy of the Commitment Letter or Letter of Intent issued by the Lender): [terms and conditions]
g. Expiration of Lender’s Commitment: [date]
6. Any escrow or adjustment of purchase price (describe)? [description]
7. If any portion of the purchase price is to be deferred: I.e. Promissory Note
a. Portion deferred: ________ dollars ($________)
b. Period of payment: [period]
c. Interest rate: [rate]
d. Security interest in Assets? [security interest]
e. Security interest in other property of Purchaser? [security interest]
f. Guaranty of Purchaser or Purchaser’s shareholders? [guaranty]
C. Terms of Covenant(s) Not to Compete:
1. From Seller? [terms]
2. From Seller’s Principals? Which ones? [specify]
3. Duration of Restriction: [duration]
4. Geographical Restriction: [restriction]
D. Due Diligence of Seller
1. Overview of Business
a. If applicable, registration statements filed with the SEC and/or any offering circulars.
b. If applicable, applications filed with any national securities exchanges.
c. If applicable, proxy statements and letters to shareholders.
d. Private placement memoranda.
e. Copy of Company minute books for Company and all subsidiaries and all predecessor corporations. Please include all documents relative to any reorganization and all charter documents and bylaws.
f. Classes and series of capital stock, showing for each the number of shares authorized, issued and outstanding, par value (if any), rights of shareholders and copies of all stock certificates, including those of subsidiaries.
g. Names of directors and their affiliation with Company.
h. Name, address and phone number of Company’s independent accountants and name of partner in charge of account.
i. Name, address and phone number of any brokers connected with the sale of the Company and a copy of any such broker contracts.
j. States and countries where Company sells products/services.
k. List of subsidiaries.
2. Assets
a. Copy of any appraisals of machinery and equipment.
b. Copies of all lease/rental agreements for personal property.
c. Schedule of owned real property, including location, description of any encumbrances on the property, copy of recent title insurance policies or commitments, copies of deeds and any recent surveys.
d. Copies of any appraisals for real property.
e. Schedule of leases for real property, including location and copy of lease.
f. Location of material assets not located on Company’s premises (e.g., tools, dies, blueprints, computers).
g. Schedule of all U.S. and foreign patents, trademarks, service marks, tradenames, copyrights, brand names, trade secrets or other proprietary information (including inventions, processes, know-how and formulas), including name of record owner, description of any registrations or applications for registration, licensing agreements or other agreements pursuant to which Company uses the property or permits the use of the property by others, royalties received or incurred, and any infringement action or challenges to ownership pending or threatened.
3. Labor Matters
a. Description of composition of work force, including Union affiliation and wage and benefit packages, including (a) copies of any labor contracts; (b) description of pending or threatened grievance proceedings, disputes or labor litigation; (c) description of charges of any unfair labor practices, EEOC violations or labor law violations; and (d) work stoppages.
b. Details of any violations, citations or allegations regarding the failure to comply with any environmental regulations of OSHA or similar employee health and safety laws and regulations.
c. All side agreements, local understandings having a current impact.
d. All Settlement Agreements having a current impact.
e. All arbitration awards and grievance resolutions having a current impact.
f. Ten (10) years strike history and related documents.
g. Documentation regarding organizational attempts for the past five (5) years.
h. All NLRB documentation for the past five (5) years.
i. All department of labor documentation for the past five (5) years.
j. All personnel policies.
k. All employee handbooks.
l. All affirmative action plans with current status reports.
m. All audit reports of OFCCP.
n. All compliance agreements, letters of commitment or conciliation agreements entered into with any agencies.
4. Products
a. Copies of all brochures and catalogs used in the sale of products by Company.
b. Copies of all warranties of products given with sale.
c. A description of product liability considerations, including Company’s historical experience, details of any product liability insurance carried (including amounts of coverage and term), and details of any product liability litigation.
d. Approvals, authorizations or certifications obtained from industry associations or Underwriters Laboratories, and any requisite consents to transfer the same.
5. Credit Agreements
a. Term Loan/Revolving Credit/Line of Credit Agreements.
b. Bonds, notes and debentures.
c. Guaranties, contracts of indemnity or suretyship.
d. Mortgages, pledge agreements, deeds of trust, title retention agreements.
e. Grants by the Company of security interest in its property or security interest held by the Company in the property of others.
f. Security Agreements.
g. Financing Statements, continuation statements, fixture filings.
h. Letters of credit.
i. Lease purchase agreements.
j. List of receivables from related parties.
k. Any other material financing arrangements.
6. Employee Benefit Plans and Employment Agreements
a. Pension or Profit-Sharing Plans, including IRS determination letters, IRS Form 5616 and most recent IRS Form 1500.
b. Peferred Compensation Plans.
c. Stock Option Plans and Bonus Plans.
d. Incentive Compensation Plans.
e. Life Insurance Plans.
f. Medical and Disability Plans.
g. Other plans, agreements or arrangements.
h. Employment, Non-Competition and Consulting Agreements
i. Confidentiality Agreements.
j. Severance Agreements or arrangements.
k. Employee benefit booklets, including Summary Plan Descriptions for Plans (pension and welfare).
l. The two (2) most recent actuarial reports and accountant’s reports on all plans.
m. List of assets of each Plan at most current available market value.
7. Insurance
a. Schedule of insurance indicating type of risk, amount of coverage, insurer, insurance broker, deductibles, premium and term.
8. Other Contracts, Agreements and Arrangements
a. Franchise Agreements (Company as franchisee or franchisor).
b. License Agreements.
c. Joint Venture/Partnership Agreements.
d. Agency Agreements.
e. Performance bonds.
f. Customs bonds.
g. Powers of attorney.
h. Agreements restricting the conduct of the Company or its business.
i. Letters of intent.
j. Dealer or Reseller Agreements.
k. Agreements with Foreign and Domestic Sales Agents and Sales Representatives.
l. Consulting Agreements.
m. Service Agreements.
n. Installment Sales Agreements, Conditional Sales Agreements.
o. Forms of purchase orders and sales orders.
p. Consignment Agreements.
q. Contracts with advertising/public relations agencies.
r. Research and Development Contracts.
s. Contracts with federal/state/local government or agencies.
t. Shareholder Voting Agreements or arrangements.
u. Copies of letters received by auditors for the most recent fiscal year.
v. Any other material agreements.
9. Litigation
a. Pending or threatened lawsuits.
b. Pending or threatened investigations or proceedings before governmental or regulatory entities.
c. Pending or threatened arbitration proceedings.
d. Consent decrees, judgments, orders, injunctions to which Company is subject.
10. Government Compliance
a. Permits, authorizations, registrations, licenses or qualifications necessary for the conduct of the Company’s business (including qualifications to transact business as a foreign corporation in various states).
E. Documents Required to Close Transaction:
1. Asset Purchase Agreement:
a. Long Form (detailed representations and warranties): [long form]
b. Short Form: [short form]
2. Letter of Intent: [letter]
3. Instruments of Transfer for Assets:
a. Bill of Sale: [bill of sale]
b. Assignment of Lease: [assignment]
c. Deed of Real Property: [deed]
d. Assignment of Patents, Trademarks, Copyrights, Licenses: [assignment]
4. Covenants Not to Compete:
a. From Seller: [covenant]
b. From Seller’s Principals: [covenant]
5. Bulk Sales Filings (if required by state law for sale of inventory): [filings]
6. Releases:
a. UCC-3 Termination Statements: [statements]
b. Mortgages on Real Property: [mortgages]
c. Other Creditors (e.g. judgment liens, tax liens): [specify]
7. Check for Cash Portion of Purchase Price: [check]
8. Bill of Sale from Purchaser (if Tangible Property is part of Purchase Price): [bill]
9. Share Certificates of Purchaser (if Purchaser’s stock is part of Purchase Price): [certificates]
10. Stock Powers for Purchaser’s stock (if Purchaser’s stock is part of Purchase Price): [powers]
11. Promissory Note for Purchase Price: [note]
12. Security Agreement in Assets: [agreement]
13. UCC-1 Financing Statement: [statement]
14. Guaranty of Purchaser: [guaranty]
15. Guaranty of Purchaser’s Shareholders: [guaranty]
16. Secretary’s Certificate of Seller: [certificate]
a. Certificate of Incorporation: [certificate]
b. Bylaws: [bylaws]
c. Certificate of Good Standing (state of incorporation): [certificate]
d. Certificates of Good Standing (each other jurisdiction where Seller is qualified as a foreign corporation): [certificates]
e. Authorizing Resolutions of Seller (must have 2/3 vote of shareholders in some states): [resolutions]
17. Secretary’s Certificate of Purchaser: [certificate]
a. Certificate of Incorporation: [certificate]
b. Bylaws: [bylaws]
c. Certificate of Good Standing (state of incorporation): [certificate]
d. Certificates of Good Standing (each other jurisdiction where Seller is qualified as a foreign corporation): [certificates]
e. Authorizing Resolutions of Purchaser: [resolutions]
18. Officer’s Certificate of Seller (Representations and Warranties True as of Closing Date): [certificate]
19. Officer’s Certificate of Purchaser (Representations and Warranties True as of Closing Date): [certificate]
20. Opinion of Counsel to Seller and Selling Shareholders: [opinion]
21. Opinion of Counsel to Purchaser: [opinion]
22. Filings with Government Agencies:
a. Hart-Scott-Rodino: [filing]
b. U.S. Commerce Department (if foreign investment): [filing]
c. Environmental: [filing]
d. Alcoholic Beverages (if liquor permit): [filing]
e. Licensing Authorities (if regulated business or professional practice): [filing]
23. Required Consents of Other Third Parties:
a. Lenders to Seller: [consent]
b. Other Creditors: [consent]
c. Landlord: [consent]
d. Government agencies: [consent]
