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Asset vs. Stock Purchase Comparison
We recommend that you consult with a qualified CPA and/or attorney to assist you in evaluating the relative merit of structuring a business transaction or a stock or asset sale. However, the following is a summary of the common advantages and disadvantages of the alternative transaction structures:
Asset Sale vs. Stock Sale
Advantages |
Disadvantages |
- 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.
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- No established credit
- Rehire the employees
- Negotiate transfer of leases & contracts
- New licenses
- Operating Capital
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Stock Sale vs. Asset Sale
Advantages |
Disadvantages |
- 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 compensation 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
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- Legal liability for the corporation prior to the purchase
- Assets are normally fully depreciated
- Sometimes stock is a hard sell to CPA's & lawyers
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