Many companies ask what the difference is between an asset sale and a stock sale. This is an important question that has many important implications for both the buyer and the seller. The following is a general list of characteristics for both deal types.
Asset deals:
- Buyers can pick only the assets they want and exclude liabilities they don’t want
- Can be less complicated to transact from a legal standpoint, particularly if there are any securities filing requirements
- There can be significant tax advantages to an asset purchase to the buyer
- Usually require less due diligence on the part of the buyer since liabilities can be excluded from the deal. These deals generally have less risk for the buyer
Stock deals:
- Allow certain assets to be transferred more easily to the buyer. This can be very important when dealing with technical certifications, service contracts, and other valuable assets
- Can have tax benefits to the parties, especially when they are states that impose asset transfer taxes
- Require more due diligence on the part of the buyer
As you can see, there is no right or wrong deal structure, only the perfect deal to suit both parties. If you are considering a M&A transaction and need some strategic advice, feel free to contact me.
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