Comparing Asset and Stock Deals

Shadowing: “…in an asset transaction you can cherry-pick the assets you’re gonna buy and the liabilities you’re going to assume. So I can go into a situation as a buyer and say I want these particular assets from the seller, I only want to assume certain operating liabilities or certain contractual liabilities that are known, that I understand, and that I can value or evaluate the risk of. And then you move forward on that basis. Anything left over remains with the seller entity. The benefit for the buyer is you understand what you’re getting — there’s not a lot of unknowns. It also streamlines the diligence process somewhat from the buyer’s perspective. On the stock side, the main difference is you’re taking the entire organization. You’re taking all the liabilities, all the historical liabilities, and you’re taking all of the assets, whether they’re part of the business you want or not. So it’s really, you’re taking on the entire enterprise.”