Sale and purchase of a business

Sale and purchase of a business via stock purchase, exchange or asset purchase

Acquiring a business other than starting from scratch is a typical way of growing existing business and expanding into further. There are many different methods of doing it and building it, such as stock purchase, corporate mergers and asset purchase. Via stock purchase, the acquirer simply buys most or all of the target corporation’s outstanding shares. Usually there will be a negotiation stages during this process between the existing shareholders and the acquirer. If there are only one or few shareholders, then the process will be simple and easy, but if there are many more shareholders, than it becomes difficult after all.

Regarding asset purchase, the acquirer will have an option of buying most of all the things owned by the existing business and uses the assets to continue the business. In this case, the purchaser can choose what they want and leave behind what is not needed. That includes liabilities as well.

There will be very complicated tax implications involved in this entire acquisition process, along with disposing of a business. Therefore it is strongly recommended that expert’s advice should be accompanied by whenever possible. Also the shareholders should approve the corporation’s stock or asset sales while purchase process is ongoing.

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