Equity Purchase vs. Asset Purchase

by a searcher from Brigham Young University

7 months ago

I'm working on a deal right now where the seller has offered to structure the transaction as an equity purchase rather than an asset purchase. I would love to hear the pros and cons of an equity purchase. Important note: the seller will remain liable for all long-term liabilities.

Thanks!

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11 comments

lender from California State University, Sacramento - College of Business Administration

Would need to know way more about the deal to weigh in. Email for my exec summary template if you’d like the share your buyside overview of the deal. Specifics drive the answers here.

7 months ago | like reply | 0 likes

searcher from Stanford University - Graduate School of Business

Yeah, if you believe your marginal tax rate will put you in the highest income bracket, plus state tax, you could be talking a substantial tax bill difference. i.e. being able to depreciate a hypothetical 5M asset acquisition price over 3-15 years could be close to 2.5M in tax savings over that time period.

7 months ago | like reply | 1 like

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