Exit Strategy » Asset vs. Stock

Probably the most important consideration to make when you are buying or selling you business is to decide whether it will be structured as an asset transaction or a stock transaction. This decision has huge impacts in various areas and is different if you are a buyer or a seller.

Below is a partial list of the key areas of the transaction affected by your decision of Asset vs. Stock sale or purchase:

Taxes

The IRS looks at asset sales and stock sales through different lenses, and there are different tax rates to be considered.

Legal Considerations

The assumption of all risks and liabilities is part of the transaction for a stock deal. This includes environmental issues.

U.S. GAAP

If you acquire the stock of the company, then you are in essence acquiring the balance sheet and period transactions. You need to consider this is you are publicly traded or if you have a larger organization and deal with outside investors or financial institutions.

Control Issues

Who is in control of your company when you buy or sell it?

HR

HR and employee issues, in regards to history and possibly benefits, look different in an asset or stock transaction