What’s the difference between an asset purchase of a business and a stock purchase of a business?
When a business is sold, a decision must be made as to the nature of how the business is transferred from the selling party to the buying party. In an asset purchase, the buyer simply purchases the assets of the company (except cash), such as the fixtures, furniture, and equipment, as well as intangibles such as goodwill. In this type of structure, the buyer usually does not assume any liabilities of the business. In a stock purchase, the shareholders’ stock (or member’s interest, in the event of the sale of a partnership or LLC) is sold directly to the seller. There are tax implications surrounding both of these types of agreements, so it is important to do research to determine how to best serve both parties.
Review a sample Asset Purchase Agreement and a Stock Purchase Agreement to draw your own conclusions as to how you may best want to structure your purchase agreement; however, if you are planning to buy or sell a business, consider consulting with Value Business Brokerage Inc. to determine the best way to structure your purchase or sale. Contact us at (703) 527-5102 to get started.