In an acquisition, sometimes it’s advisable to look at the option of buying all/parts of its business assets, contracts, patents,etc instead of owning the company.

Reasons might be:

• that acquirer might not want to entangle itself with the existing liabilities in the acquired company;
• off-balance sheet liabilities that might be omitted during the due diligence( quite messy to recover even though it might be provided for in the agreement);
• no interest in running the management of the company;
• interested only in certain assets like its brand, patents and/intellectual properties owned by the acquired company and
• others

This happened in a reported case in The Star (1/11/06), pertaining to Evergreen Fibreboard Bhd said its wholly-owned unit Evergreen Fibreboard (JB) Sdn Bhd plans to acquire a fibreboard plant ,equipment, machinery, tools, furniture, fittings, vehicles and inventories and for RM107mil from Takeuchi MDF Sdn Bhd. The company also acquire Takeuchi’s contracts with its customers and suppliers.

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