Question

In M&A, for what list of reasons buyers will prefrer to buy assets over stocks?

Answer 1

often used when buyer wants to acquire single division/business unit within company

Buyer can “step up” basis of several assets over current tax values & obtain tax deductions for depreciation/amortization.

Buyer can state the liabilities it is going to take. This limits buyer’s exposure to unkown/unstated liabilities. Also he can state which assets it is not buying. This is advantageous if seller has lot of accounts receivable which buyer thinks would not be collected. Due to these reasons, buyer needs to conduct lesser due diligence.

Minority shareholders who don’t want to sell can be forced to accept asset sale.

Buyer can select the employees they would offer jobs.