In an article published on April 24 in Automotive Buy Sell Report, George Taylor explores acquisition agreements from a seller’s perspective, specifically providing insight on the pricing of assets.

When dealing with purchase price computations in an asset transaction, he outlines the following considerations for sellers: purchase price calculation, parts inventory, fixed assets, and assumed contracts.

One of the more damaging provisions from the seller’s perspective relates to the returnable parts standard, a short-hand method in every acquisition agreement providing that buyers were required to purchase only those parts that were returnable to the manufacturer under current return programs. As time passed however, many parts are non-returnable from the moment they are purchased by the seller.

A second issue relates to the treatment of those parts not considered returnable. In most buyer-oriented agreements, parts, where no purchase price is assigned, are lumped into the other assets category and are considered purchased as part of the blue sky. In other words, the buyer receives them for free.

For the full article, you may click here.