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Understand the issues involved in analyzing a stock vs. an asset purchase when inside and outside...

Understand the issues involved in analyzing a stock vs. an asset purchase when inside and outside basis differ significantly for the buyer and seller.

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Answer #1

Contracts – especially with customers and suppliers – may need to be renegotiated and/or renovated by the new owner

The tax cost to the seller is typically higher, so the seller may insist on receiving a higher purchase price.

Assignable contract rights may be limited.

Assets may need to be retitled.

Employment agreements with key employees may need to be renegotiated.

The seller still needs to liquidate any assets not purchased, pay any liabilities that have not been assumed, and take care of any leases that need to be terminated.

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