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.
  • No established credit
  • Rehire the employees
  • Negotiate transfer of leases & contracts
  • New licenses
  • Operating Capital

 

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
  • Legal liability for the corporation prior to the purchase
  • Assets are normally fully depreciated
  • Sometimes stock is a hard sell to CPA's & lawyers