Asset Purchase Vs Stock Purchase

In an acquisition, there are 2 things that determine how ownership, liabilities, and assets are transferred from the seller to the buyer, whether the purchase is a stock purchase or an asset purchase.

            An asset purchase is when a buyer acquires the tangible and intellectual assets of the selling company. These types of assets include but are not limited to office supplies, production equipment, machinery, real estate, customers, accounts, patents, trademarks, websites, and phone numbers. Basically, anything that can be tied to the company and its making of profit. Unlike stock acquisitions, asset purchases are in cash rather than stock.

            A stock purchase is when a buyer purchases a controlling amount of stock from the target company to gain an ownership interest in the company. After the acquisition, the buyer then becomes the owner of the target company and inherits its assets and liabilities. These transactions involve stock or a mix of cash and stock. Typically, these types of transactions happen when buyers want to acquire targets as quickly as possible or are trying to expand their portfolio.

            Everyone has their reasons to merge or acquire, but what about how you acquire? The more you know, the more prepared you can be when the time comes to buy a business or sell your own. For more information or business inquiries, please contact The Center at (618) 997-3436.