In a Share Deal, the purchaser will acquire the corporation, including all of its inherent liabilities. This generally includes the liability for taxes. In an Asset Deal, the purchaser will generally only inherit those liabilities that it specifically assumes pursuant to the terms of the asset purchase agreement. Because a stock transaction oftentimes results in an ownership change, it may advantage the sellers to structure the transaction as an asset deal rather than a stock deal. The parties commonly model the tax consequences of both transactions and pursue the most favorable tax structure. This three-part series discusses asset deals and stock* deals and highlights key considerations for business leaders who may be exploring a purchase or sale transaction of your business. In Part 1, we will provide you with an overview of asset and stock sales and weigh-in on their pros and cons. Asset Deal

Further, any fixed assets acquired in an asset deal are written up to fair market value, allowing for full depreciation of the value of these assets for tax purposes. In a stock deal, the buyer takes a carryover tax basis in the business’ assets. Stock Deals – Just as in selling the stock of a C Corporation, when pass-through entity investors sell their ownership interests, they will generally pay tax at personal capital gain rates based on the difference between the sales price and their basis in the investment. Rather than the buyer inheriting the tax basis of the acquired assets (“carryover basis”), however, there are two elections that can be made that actually allow for a step-up in the basis of the acquired assets: A corporation can make an election to treat a qualifying stock purchase as an asset purchase for federal income tax purposes. When the election is made, under Section 338 of the Internal Revenue Code, the IRS treats the transaction as if the buyer was purchasing the target’s assets for an amount based on the stock purchase price. The decision to structure a deal as a stock sale or an asset sale is usually a joint decision by the buyer and seller. For a variety of legal, accounting and tax reasons, some deals make more sense as stock deals while others make more sense as asset deals. Often, the buyer will prefer an asset sale while The liability issue typically will drive buyers to an asset deal; however, additional protections, including indemnity provisions, can be used in stock deals to ease the concerns of the buyer. Assignments and Consents. Typically a stock deal will involve much less complexity as you do not have to move the entire business into a new entity. In a Share Deal, the purchaser will acquire the corporation, including all of its inherent liabilities. This generally includes the liability for taxes. In an Asset Deal, the purchaser will generally only inherit those liabilities that it specifically assumes pursuant to the terms of the asset purchase agreement. Because a stock transaction oftentimes results in an ownership change, it may advantage the sellers to structure the transaction as an asset deal rather than a stock deal. The parties commonly model the tax consequences of both transactions and pursue the most favorable tax structure.

This three-part series discusses asset deals and stock* deals and highlights key considerations for business leaders who may be exploring a purchase or sale transaction of your business. In Part 1, we will provide you with an overview of asset and stock sales and weigh-in on their pros and cons. Asset Deal

30 May 2018 What is typically the best way to determine if a transaction is structured as a stock or asset deal? Do companies have to disclose this in the merger  3 Dec 2013 Buying or Selling a Company: Stock or Asset Deal? Agreeing on a purchase price isn't the only negotiated outcome of a business transaction. In contrast to a stock purchase, the buyer in an asset transaction will only acquire the assets described in the acquisition agreement. Accordingly, the assets to be  1 Apr 2006 Under Belgian law, no specific all-encompassing regulation governs an acquisition of the shares or the assets of a company. The applicable  Most acquisitions can be structured either as an asset transaction or as a stock transaction. Where an asset transactionAsset DealAn asset deal occurs when a buyer is interested in purchasing the operating assets of a business (instead of the shares), and is a type of M&A transaction. What is an Asset Deal? Asset Purchase Agreement. In order to complete the asset deal transaction, Types of Assets Purchased. An asset deal purchase can include either tangible or intangible assets. Benefits of an Asset Deal. An asset deal may have several advantages over a stock deal,

18 Jun 2019 RKL explains the 338(h)(10) tax election, which recharacterizes a stock purchase into an asset one, and what that means for buyers and 

21 Dec 2017 In any M&A transaction, one of the first questions we get from involved parties is how the deal should be structured: asset sale or stock sale? The  12 Feb 2019 Stock vs. Asset Purchase. From a tax perspective, a deal can be structured in two basic A buyer can also purchase the assets of the business. 30 May 2018 What is typically the best way to determine if a transaction is structured as a stock or asset deal? Do companies have to disclose this in the merger  3 Dec 2013 Buying or Selling a Company: Stock or Asset Deal? Agreeing on a purchase price isn't the only negotiated outcome of a business transaction.

Although deal lawyers generally describe their practice as involving “mergers and acquisitions,” the sale of a small or medium-sized business is usually structured as either an equity sale or an asset sale. Which structure is right for you depends on your circumstances. This post discusses some of the pros and cons of each deal structure.

18 Sep 2013 Are you thinking of structuring your next deal as a stock purchase or an asset purchase? Why does it need to be either or? Occasionally deals 

11 Jul 2019 In a stock purchase, the buyer purchases the stock of the Target from the Target's stockholders. Because the buyer purchases the Target's stock 

18 Sep 2013 Are you thinking of structuring your next deal as a stock purchase or an asset purchase? Why does it need to be either or? Occasionally deals  5 Oct 2016 A. Acquisition of Assets. • Buyer, or subsidiary of Buyer, acquires assets of Seller for stock of Buyer, cash or other consideration and the  At its most basic level, a carve-out transaction is a deal in which a subset of assets assets or stock of the carved-out business are actually sold to a third- party  12 Aug 2019 The share deal, i.e. the sale of shares in property-owning companies, frequently offers advantages with regard to the “transaction taxes”, i.e.  A potentially less appealing aspect of an asset purchase is that the transaction is likely to be caught by the Transfer of Undertakings (Protection of Employees)  When buyer and seller negotiate the structure of the deal as an asset sale or a stock sale, they need to factor in the tax consequences when setting the agreed  21 Dec 2017 In any M&A transaction, one of the first questions we get from involved parties is how the deal should be structured: asset sale or stock sale? The 

The decision to structure a deal as a stock sale or an asset sale is usually a joint more sense as stock deals while others make more sense as asset deals.