Asset Sale vs Stock Sale

In an asset sale, a buyer purchases specific assets of a business, such as equipment, inventory, or real estate, leaving behind liabilities and the structure of the company. This allows buyers to choose only what they want. In a stock sale, the buyer acquires the entire company by purchasing its stock, including all assets and liabilities. This means the buyer inherits any existing obligations and legal issues. Each approach has different tax implications and affects the risks and benefits for both buyer and seller, often influencing the decision based on each party’s goals.