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- If [n]othing in the record shows that the government agreed to the proposed novation or that the proper novation documents were executed, then absent proof of novation, the seller will remain liable to the government for performance and the buyer presumably the subcontractor. See Size Appeal of Native Energy & Technology, Inc., SBA No. SIZ-5858 (2017).
- When your partially purchase a business’ assets that include the government contracts division of that company – those revenues can also be imputed to the buyer even though the buyer did not actually gain the revenues.
The above just shows the serious complex issues that can arise over and beyond the underlying sale of the business that is involved with federal government contracts. Get legal help today.
When the sale of a business, assignment of contract, business purchase contracts, or merger and acquisition of companies include government contracts as assets, our government contract novation attorneys help by:
- Managing and overseeing the business purchase and asset sale process for FAR compliance.
- Pre novation price analysis for arm’s length transactions
- Developing government contract business novation agreement requirements
- Providing small business merger and acquisition help;
- Novation agreement vs assignment assistance
- Native American and SBA 8(a) business purchase agreement drafting
- Service Disabled Veteran Owned Company business asset purchase agreement services
- Drafting required FAR contract novation agreement documents for contract transfer
- Compiling asset purchase agreements/contract to purchase a business from your state-level attorneys
- New Novation and business contract of sale compliant with FAR regulations
- Consulting on merger and acquisition of government contracting businesses
- Assignment of contract legal services for federal contractors
- Representation with stock purchase vs asset purchase advantages and disadvantages
Federal Government Contract Novations
The federal contracting legal system can be very intimidating. Many federal contractors accept the fact there will be a requirement for a contract novation agreement after buying or selling a company. However, when the transaction is examined by an experienced government contracts attorney, potential causes for the contracting officer’s denial of the novation are uncovered. Depending on the type of business sales transaction, whether there is an asset purchase vs stock purchase is very important.
At Watson & Associates, our government contract novation lawyers and frequently help small businesses and larger DOD contractors to navigate through the complex maze of contract assignments, business sales resulting from a small business asset purchase agreement vs stock purchase, and the potential legal consequences.
SINCE SOME OF OUR PROFESSIONALS WORKED FOR FEDERAL CONTRACTING AGENCIES, WE UNDERSTAND BOTH SIDES OF THE COIN AND CAN BETTER PREPARE YOU GETTING AN APPROVAL FROM THE CONTRACTING AGENCY.
Small Business Asset Purchase vs Stock Purchase Sales – Experience Matters
The process of buying and selling a business that has government contracts begins with knowing how the system works and using it to the clients’ advantage. At Watson & Associates, LLC, we have helped large and small businesses to navigate through the complex nuances involved with small business asset purchase vs stock purchase business sales. Buyers and Sellers with a federal contract transfer must also be aware of stock purchase vs asset purchase advantages and disadvantages.
- Did you know that without contracting officer approval, a signed novation agreement can be deemed meritless and has no value? See Size Appeal of eTouch Federal Systems, LLC, SBA No. SIZ-5280 (2011)
- Did you know that contractors must request submission of any comments or objections to the proposed transfer within 30 days after notification to the government?
- If the parties do not get the government involved or fail to follow FAR novation of contract rules, there can be legal consequences.
- Although many government contractors understand that an asset purchase sale is favorable for government contract novations, there is much case law that shows not all commercial small business asset purchase agreement templates are acceptable to the federal government.
THE ASSIGNMENT CLAUSE DOES NOT ON ITS FACE ALLOW FOR SELLING GOVERNMENT CONTRACTS
To get a government contract novation agreement approved, both the seller and the buyer should make sure that they both understand FAR 42.12 and its sometimes-confusing compliance rules. Companies should also be aware of the stock purchase vs asset purchase agreement advantages and disadvantages.
At Watson & Associates, LLC, our federal government contract lawyers frequently with small businesses and larger contracts seeking to get a novation contract approved by the contracting officer. We also work with local attorneys who are not familiar with the FAR 43 regulations and the nuances that can arise with the traditional Asset Sale Purchase Agreement when it comes to government contract novations.
Asset Purchase vs Stock Purchase in Government Novation of Contract Transactions
Since the facts of each case are highly relevant to the intended outcome (get the contracting officer’s approval) our government contract attorneys and business lawyers provide a wide array of legal advice and representation. When a contract to purchase a company involves a small business asset purchase agreement, a novation agreement is generally required under the FAR rules. Stock purchase sales generally do not require a novation agreement
The government will scrutinize how the novated asset sale agreement form is structured and new novation of contract price. It will also look to see if it violates the Anti-Assignment Statute. If it does, then the sale and business purchase agreement that ultimately involves the assignment of contract an existing government contract may become void. Having the proper asset allocation, valid business assets, and whether there is a risk to the government are all issues that will be addressed. As part of our corporate and general business law practice, our small business asset purchase agreement attorneys and government contract lawyers will oversee the entire asset purchase and sale process, comply with FAR Part 42, and work with your state attorneys to increase your chances of government approval.
Small Business Asset Purchase Vs Stock Purchase & Government Contract Novations
When buying or selling a business involving federal contracts, the parties should understand the difference between a small business asset purchase vs stock purchase sales. This can impact the requirement for a novation under FAR Part 42. In a small business asset purchase, the company that sells the business with keep legal possession of the company. The buyer, on the other hand, will get the individual assets of the company including:
- the company equipment
- trade secrets,
- company inventory.
In Asset purchase sales the seller keeps any cash and mostly keeps the long-term business debt obligations. Normalized net working capital is also typically included in the asset sale. Net working capital often includes accounts receivable, inventory, prepaid expenses, accounts payable, and accrued expenses.
A Stock purchase sale, on the other hand, occurs when the buying party gets the selling shareholders’ stock directly and therefore gets ownership in the legal entity. The actual assets and liabilities acquired in a stock sale tend to be similar to that of an assets sale. Any business assets or liabilities not desired by the buyer will not be part of the transaction and will be distributed or paid off prior to the sale. Another is that stock sales do not require complex and individual asset conveyances because the title of each asset lies within the corporation.
Under FAR Part 42, asset purchase sales require a novation of contract where a stock sale does not. However, is prudent to still communicate with the contracting officer for each type of transactions. These are all areas where our government contracts attorneys can help.
Small Business Purchase Agreements and Federal Contracts Help
We Help Federal Contractors in All States with business purchase contract transfers
As federal government contracting attorneys, we help large contractors with their contract to purchase a business involving federal contracts and to get a federal contract novated in virtually all states. Whether 8(a), service-disabled or otherwise, our goal is to effectively manage the government novation of contract and Asset Sale and Purchase Agreement for buying a business or selling an existing business with federal government contracts. Learn more about how your business contract of sale impact federal contracts and asset sale agreement and novations in government contracting.
Call a Federal Small Business Asset Purchase Agreement Novation Law Attorney
To schedule a free consultation about your small business transfer with our experienced federal novation and government contract attorneys, call Watson & Associates today toll-free at 866-601-5518.