Stock Purchase vs Asset Purchase

searcher profile

December 15, 2025

by a searcher from Northwestern University - Kellogg School of Management in Chicago, IL, USA

I am looking at a $2M purchase of a company and the owner wants to know if its going to be a stock or asset purchase. I know asset is in favor of the buyer and each type come with its own set of headaches. I believe he is asking me for one or the other based on the seller tax implications from the type of sale. Can anyone explain to me what the difference in Ent. value would be for the type of purchase? For example, $2M is a fair PP for a stock purchase, but maybe $2.1M would be the equivalent to an asset purchase.
0
2
41
Replies
2
commentor profile
Reply by a searcher
from Northwestern University in Chicago, IL, USA
There is not one answer to this. An asset purchase is beneficial to the buyer because they don't keep the liabilities of the company, and the value of that depends on the risks left behind. There are Tax advantages to the seller of an equity purchase for sure, but sometimes you can do an asset purchase for legal purposes and an equity purchase for tax purposes. Also it depends on how key contracts transfer. All this is to say you need an accountant and a lawyer.
commentor profile
Reply by a lender
from University of Missouri in Denver, CO, USA
I think most times unless you are needing to transfer key contracts that asset purchase is more clean for the buyer
Join the discussion