Stock vs. Asset Sale for a Company w/ Many Contracts

searcher profile

February 24, 2022

by a searcher from University of Illinois at Urbana-Champaign in Dallas, TX, USA

Hi all - I am evaluating a company in the B2B services space. While my default is to reduce liabilities via an asset purchase, I am wondering if anyone has pursued a stock sale based on customer contracts, and how they thought through this trade off.

My understanding on the asset sale is that every customer would have to take the time to assign the contract to the new entity. This brings in a high attrition rate, particularly for businesses that aren't specialized. With a stock sale, these contracts are included in the sale.

Looking forward to hearing thoughts from the community on this trade-off.

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commentor profile
Reply by a searcher
from The University of Chicago in San Francisco, CA, USA
take a look at the contracts - many can be assigned without consent, so won't be an issue with an asset sale - it just depends how the contracts read
commentor profile
Reply by an intermediary
from The University of Chicago in Chicago, IL, USA
Happy to discuss pros/con of SPA/APA. Please, DM.
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