You have a beard trimming business that specializes in former ZZ Top members and "reform" Amish. There’s another beard trimming business around the corner close to going broke. They need money. FAST. You don’t want the business itself, but you do want 10 of their superior trimming gadgets, and perhaps a couple of their ultimate luxury massage chairs.
In this instance, you’re using a simple form of an asset acquisition strategy. You’re buying assets, but not stock or ownership in the company itself. The bigger reason you really care about this being an ASSET acquisition of things INSIDE the company rather than the entire corporation? Liability. You have no idea if in the past they’ve poked Amish people, ZZ Tops and other hirsute folk who are all getting together a giant class action suit against you.
If you only buy their trimmers and...well, assets…then the corporate liability doesn’t attach to you. It remains with the owners who continue to own; all you’ve bought there the products inside of it. Much safer way to travel if you have pockets that are deep.
Related or Semi-related Video
Finance: What is a Corporation?89 Views
Finance a la shmoop what is a corporation? corp-o-ration.. [Mouth saying syllables of corporation]
see the Corp in there? well it's latin short for corpse or
body so a corporation may or may not be cold and covered with maggots [Man disguised as a corpse wakes up and screams]
corporations are just legal bodies they're generally set up so that
there's a clear legal distinction between things and individual does and
things that the company she works for does let's say you want to set up your [mime artists at the window of a shop]
own mime training studio brother can you spare a mime, but then you hit a wall
one of your mime trainees becomes badly injured while trying to get out of a [mime trainee gets injured while attempting to get out of a glass box]
glass box and you get sued you lose..wow you're totally speechless so your
corporation which was basically just you ten grand in the bank and a hat rack [Laptop showing $10.000 in the bank beside a hatrack]
full of berets well it loses everything you turn over your 10k to the sue-er
the one who sued you and you dust off your hands and move on try new venture [mime dusts off hands]
tapping into your prior experience as a mime therapist well legally the guy who
sued you while working for the corporation can't sue you personally
your $350,000 home is untouchable yeah who knew miming paid so well same deal [Mimes $350,000 home]
on that untouchable-ness of your Prius and the untouchable-ness of your
collection of invisible ropes, the legal body of the corporation threw itself on [Mime pretending to move along an invisible rope]
the landmine of your lawsuit and took the blow while you just walked away [Mime artist moon-walking off stage]
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