How does a “sale” differ from a “merger” or “acquisition” of a business?
The terms “sale,” “merger” and “acquisition” are often used interchangeably to describe a variety of different transactions through which a business is sold. Assuming that the business being sold is a corporation, two basic transactions can occur: a purchase and sale of assets or a purchase and sale of stock. In a purchase and sale of assets, a corporation sells substantially all of its assets to an acquirer without transferring ownership of the actual corporation. An asset sale requires approval of the corporation’s shareholders, and is typically followed by a dissolution of the corporation and a distribution of the remaining assets, including the proceeds of the asset sale, directly to the shareholders. A purchase of stock involves the acquisition of a corporation’s stock directly from its shareholders. In stock transactions, ownership of the corporation, not just its assets, is transferred to the acquirer. The acquiring corporation can either maintain the acquired corporation as a w
