Series 79: Stock Purchase

Stock Purchase

In a stock purchase, the buyer acquires a target company by buying the stock from the company’s shareholders. This is generally the simplest and most straightforward way to acquire a corporation. Under this approach, the buyer essentially buys the target whole and assumes all the target’s liabilities as well as its assets. A stock purchase results in a parent company owning a subsidiary. A stock purchase can be structured to be a tax-free transaction.

Stock purchases are simple to arrange when the target is private and has relatively few shareholders. This is usually done through a purchase agreement, where all the shareholders sign the agr