What are some potential advantages of a stock acquisition over an asset acquisition?
belongs to book: ADVANCED ACCOUNTING|Debra C.jeter, Paul K.Chaney|7th edition| Chapter number:1| Question number:19
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belongs to book: ADVANCED ACCOUNTING|Debra C.jeter, Paul K.Chaney|7th edition| Chapter number:1| Question number:19
total answers (1)
In an asset acquisition, the firm must acquire 100% of the assets of the other firm, while in a stock acquisition, a firm may gain control by purchasing 50% or more of the voting stock. Also, in a stock acquisition, formal negotiations with the targets management can sometimes be avoided. Further, in a stock acquisition, there might be advantages in keeping the firms as separate legal entities such as for tax purposes.
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