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What steps are necessary when acquiring another business?

When Michigan businesses set a goal, there are often many steps that must be taken along the way before the final destination can be reached. This is particularly true when a major project is at stake, as there are several things that must be accomplished in order to complete the larger project.

For instance, when a company is interested in acquiring another business, the end goal may be the acquisition, but there are several steps that must be completed to accomplish that goal. A solid purchase agreement must be drafted to outline all of the essential terms of the deal, and in order to protect the business from things that may go wrong.

Even before that point, there are precautions to consider in order to ensure the company being acquired is what it is claiming to be. A UCC search often must be conducted -- along with a search of the public records at the county courthouse and with the Secretary of State -- to determine whether any liens or judgments have been filed against the other company. The acquiring company can also determine whether title may be transferred to the purchaser for things like inventory, equipment, machinery and fixtures.

Under the Uniform Commercial Code, the Secretary of State's Office is typically where secured transaction documents are filed. Here, companies can locate financing statements, which provides public notice of whether an entity has a security interest in collateral of the entity.

Ultimately, these are just some of the small steps that must be conducted along with many others when a company and its assets are being acquired. The acquiring company needs to protect itself by taking all the legal steps necessary to transfer title and complete the purchase.

Source: Michigan Secretary of State, "UCC Overview," accessed on Sept. 19, 2015

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