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.