Asset vs. Stock Sale
Sale of Assets:
- purchasing assets, not liabilities
- stepped-up basis for depreciation and allocation of purchase price to assets
- pick and choose assets purchased
- more complex closing documents including conveyance documents
- compliance with Bulk Sales Act and sales tax issues
- possible requirement for consent of franchisor, landlord (if any) and other parties having contractual relationship with seller
- depreciation recapture by seller
Sale of Stock
- simplicity and speed
- may not require franchisor, landlord (if any) or other party's consent except where recent or sophisticated agreement
- not subject to Bulk Sales Act
- avoid possible double taxation by seller
- walking into established credit lines of the seller's corporation
- buying assets and liabilities of the corporation, including contingent and undisclosed liabilities
- assume existing depreciation schedule of assets and tax status of the corporation
Before considering any stock sale of a corporation you must consult with competent legal counsel.
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