Though these acquisitions can come in a couple of diverse types (e.g., stock buy or merger), we usually see these transactions effectuated by an asset buy agreement. An asset buy agreement is advantageous for an acquirer simply because it makes it possible for the acquirer to buy particular assets of the target business (i.e., the OLCC license, inventory, gear, and so on.) with out assuming the target company’s liabilities. Beneath are a couple of significant considerations when getting into into an asset buy agreement to obtain a cannabis business.
Obtaining all needed regulatory approvals
An acquirer ought to in no way commit to paying the buy value for a cannabis business till all needed state and nearby approvals have been obtained that (i) enable the acquirer to appropriately personal the applicable OLCC or ODA license, and (ii) authorize the acquirer to operate the target company’s enterprise below the acquirer’s sole and direct handle. The acquirer ought to also guarantee that the asset buy agreement demands the target business to result in the city exactly where the enterprise is positioned to situation any needed permits or registrations that are essential for the enterprise to operate in the acquirer’s name ought to there be any.
Payment of the Buy Cost