Buyers in Utah normally structure a transaction as an asset sale, rather than as a stock sale. After all, an asset sale allows a buyer to purchase a company, without any worry of unknown or contingent liabilities. For the same reason, however, sellers normally prefer to sell stock.
A Utah asset protection attorney may note that selling stocks and buying assets has their benefits and detriments, including:
• Stocks are simpler to transfer
A stock transfer is easier to implement than an asset. In simple terms, the buyer buys the stock of the company owning the assets.
• Asset sales are regulated
With an asset sale, the seller may need to transfer the title separately for different assets. In this case, the seller may need to register the transfer with the state, while the buyer may need to apply for new accounts, permits, utilities, and leases. The new owner may also need to negotiate new employment, supply, and credit agreements.
• Asset sales don’t need state and federal securities law compliance
With an asset sale, a buyer does not need to comply with state and federal securities laws. As a result, they lessen their costs than when purchasing stocks.
• Stocks have hidden liabilities
In an asset sale, the seller needs to state the assets clearly in the sales agreement. Otherwise, these assets will remain the seller’s property. In some cases, if a buyer does not want a particular business aspect, they can also omit it from the list of assets.
When a person attains a company’s stock, however, they own all aspects, including its hidden liabilities.
In some manner, purchasing all the assets of a business is similar to acquiring all its stocks. After all, a buyer acquires an ongoing entity and gains control over all its assets in both cases.
In which case, however, buying assets and stocks both have their risks. With that said, consulting a local stockbroker or a local asset protection attorney may be a logical first step.