Acquisition

Acquisition is the process of transferring all assets, debts, contracts, ownership, and control to a new owner, the Purchaser, by compensating shareholders of the Target Company with cash and/or equity of the purchaser. Normal operations do not cease, there are no changes to the treatment of outstanding contracts, including employment, services, and debt. The only change is the ownership and capital structures.

Acquisition Proposal

The Purchaser offers an explicit amount of stablecoins and/or shares to acquire a Target Company. If this requires the authorization of additional shares, approval of shareholder governance is required.

Acquisition Approval

An acquisition must be approved by the target company’s shareholder governance. Before approval, the entire event can be simulated for total clarity to all parties.

Payout Calculations

If the acquisition is approved, the shareholders of the Acquisition Target receive compensation in exchange for the control of the company and all of its assets. Compensation is delivered in the form of cash (stablecoins) and/or shares. The acquisition payout structure follows the seniority structure of shares. This means that investors still receive additional compensation to account for their liquidation preference. If cash is a part of the deal, that first goes to paying liquidation preference. If the deal is all-stock, then investors receive additional stock equal to the dollar-value of the liquidation preference.

The process of acquisition include standard treatment for minority shareholders. Minority shareholders enjoy tag along rights and majority shareholders enjoy drag along rights.

Treatment of Debt

The acquisition process does not directly affect the debt of the company; it is entirely transferred to the new owners along with all existing operating contracts, service contracts, employment contracts, etc. The new owner’s capital stack is now responsible for the assurance of all obligations. After acquisition, if an obligatory payment is not made, delinquency falls upon the acquiring company.