Asset Purchase vs Stock Purchase

In an asset acquisition, the buyer specifies the liabilities he is willing to assume.

In a stock purchase the buyer purchases stock in a company that may have unknown liabilities.

In an asset acquisition, if the purchase price exceeds the aggregate tax basis of the assets, the buyer receives a stepped-up basis in the assets equal to the purchase price.

In an asset acquisition, the buyer avoids the problems presented by minority shareholders who refuse to sell, but asset purchases do not qualify for tax treatment as a tax-free reorganization..

Purchasing a business through an asset acquisition is less complicated because the parties are not normally required to comply with securities laws.

In an asset acquisition goodwill can be amortized by the buyer for tax purposes over 15 years, but in states that impose sales or transfer taxes on the sale of assets, a stock transaction can avoid some of these taxes.

If you are considering selling, Legacy Corporate Services will put you in touch with a buyer who with your attorney will structure the sale for the benefit of all parties; there is no charge to you by Legacy as we are compensated by the buyer.