Asset vs stock purchase

Following for interest

If you're conducting a stock sale: Hold-back for Reps and Warranties: Ensure you retain enough of a hold-back to cover representations and warranties, as your legal exposure is significantly greater in a stock sale. You are liable for the company's actions that occurred prior to your purchase, so it's crucial to mitigate this risk. Tax Depreciation Considerations: Depending on the nature of the business, there may be strategies to still benefit from some of the tax depreciation advantages typically associated with an asset sale. Goodwill Allocation: For asset-light businesses, where much of the value is tied to goodwill, it’s sometimes possible to argue that part of the goodwill belongs directly to the owner rather than the business. This is particularly relevant for relationship-driven businesses. When structuring the purchase, you might allocate a portion of the goodwill to the business and another portion directly to the owner. In effect, you’re acquiring both the business and the owner’s goodwill. While this approach won’t address the legal liability inherent in a stock sale, it can help with the depreciation issue. Special Considerations for C-Corps: This method has been used in scenarios involving the purchase of assets from a C-corp to help the seller avoid double taxation. However, it’s less commonly applied in stock sale situations. That said, it may still be worth exploring with your tax advisor or legal counsel.