Asset Vs. Stock Purchase
Should You Buy/Sell Assets or Stock?
Advantages & Disadvantages of an Asset Sale versus a Stock Sale from a Buyers Perspective
Advantages
No legal liability for the corporation prior to the purchase
No liabilities for employees
Costs paid for the assets are depreciable
“Clean” credit, reputation, workers comp, etc.
Disadvantages
No established credit
Rehire the employees
Negotiate transfer of leases & contracts
New licenses
Operating Capital
Advantages & Disadvantages of a Stock Sale versus an Asset Sale from a Buyers Perspective
Advantages
- Established credit
- Many times, no or minimal operating capital required
- Leases are in place
- Contracts are in place
- Employees are in place with worker’s comp rate established
- Licenses are in place
- No public notification of the sale
- No sales tax on the FF&E
- No deposits required
- Corporation, tax & employment numbers & documentation in place
Disadvantages
- Legal liability for the corporation prior to the purchase
- Assets are normally fully depreciated
- Sometimes stock is a hard sell to CPA’s & lawyers
For additional information, contact Sunbelt Business Sales & Acquisitions.