Buying the company, not just its assets
In an equity acquisition, the legal entity stays the same and only its owners change. Contracts, permits, and employees generally remain in place, which can make the transition smoother than an asset purchase. The trade-off is that liabilities stay too, including ones nobody has discovered yet, such as tax exposure, employment claims, or product issues. Some contracts still require consent because they treat a change in ownership as an assignment or a change of control. Buyers acquiring less than all of the equity also need to think about their position alongside existing owners, since their rights depend heavily on the governing documents and any shareholder agreement.
Diligence and the purchase agreement
Because the buyer inherits the company's past, diligence usually goes deeper than in an asset deal. Review the cap table and the history of share issuances, since gaps in equity records can undermine what the buyer is actually getting. Look at tax filings, litigation, material contracts with change-of-control terms, and regulatory status. The purchase agreement then allocates risk through representations, indemnities, escrows or holdbacks, and sometimes representation and warranty insurance. Price adjustments for working capital, debt, and cash are common and often the subject of disputes after closing, so the definitions deserve careful drafting.
Approvals, control, and foreign buyers
Depending on size and industry, an equity acquisition may need antitrust clearance before closing, and acquisitions by foreign investors in certain businesses can draw review by the federal committee that screens foreign investment for national security. Regulated businesses such as banks, insurers, and licensed lenders may need regulators' approval for a change of control. For minority investments, the key terms are usually board seats, information rights, consent rights over major decisions, and exit rights such as tag-along, drag-along, or put options. We look at what you are buying, what you want to control, and which approvals sit between signing and closing.
