Small business answers — NOW!

Asset purchase vs stock

Question
When should I purchase the assets of a company rather than the stock? 
Answer
When you purchase the stock of a corporation or LLC, you not only purchase all assets, but you assume all positions the company has in legal activity, including contractual commitments, as well as liability exposure.

Purchasing assets only produces a firewall between the purchaser and the past history of the selling business, including contractual commitments and liability exposure, both known and contingent.

Every business sales transaction is different; but if there is a generally accepted rule for small business purchases, it's to purchase assets, not stock.

Be sure to consult with professional legal and financial advisers to determine which approach is best for you. 
 
© 2007, Small Business Network, Inc., All Rights Reserved.
Subject to the Terms of Use of AskJim.biz
Print this page   Bookmark this page   E-mail this page to a friend   Go back to previous page
AskJim ID: 6334