Assets Vs Shares
One of the main advantages of buying the assets of a business is that it gives you a better sense of the specific assets and liabilities you will have when you have completed the transaction; instead of getting a company that may or may not have unknown or undisclosed liabilities. It also gives you more flexibility and control in what you are buying; for example, you can decide that only certain employees or business assets will be transferred to you. The downsides of buying the assets include that certain one-time transaction costs connected to the purchase might be more expensive.
Additionally, buying the assets means you will be in a contract with the company that owns the business, while buying the shares means you will be in a contract with the person or people who own the company, which requires a high level of trust on information given by the seller. There is also a risk that if the business goes sideways, the seller, as a private company, may have no other assets. You will therefore need to be compensated. One way to deal with this risk is to insist on ongoing commitments or responsibilities – commonly called “indemnities” – from the person or people who own the company.
Assets Vs SharesOne of the main advantages of buying the assets of a business is that it gives you a better sense of the specific assets and liabilities you will have when you have completed the transaction; instead of getting a company that may or may not have unknown or undisclosed liabilities. It also gives you more flexibility and control in what you are buying; for example, you can decide that only certain employees or business assets will be transferred to you. The downsides of buying the assets include that certain one-time transaction costs connected to the purchase might be more expensive.Additionally, buying the assets means you will be in a contract with the company that owns the business, while buying the shares means you will be in a contract with the person or people who own the company, which requires a high level of trust on information given by the seller. There is also a risk that if the business goes sideways, the seller, as a private company, may have no other assets. You will therefore need to be compensated. One way to deal with this risk is to insist on ongoing commitments or responsibilities – commonly called “indemnities” – from the person or people who own the company.
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