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What is a Stock Sale?

When dealing with business purchase and sale transactions, a "stock sale" represents an alternative method for the acquisition of a business. Unlike an "asset purchase" a stock sale does not involve the transfer or sale of any business assets but rather involves the sale of the stock in the corporation (or limited liability company) that owns the underlying business and business assets. Although the vast majority of business purchase and sale transactions occur by way of "asset purchase agreements", "stock purchase agreements" are utilized in limited circumstances involving issues of taxation, regulatory compliance and licensing. For the purchaser of a business there are a number of liability and taxation issues that you must discuss and evaluate with your business lawyer.

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