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Home > Tools and Resources > Ask the Expert > Buying Assets Vs. Shares

Buying Assets Vs. Shares

By Richard Parker | Diomo Corporation
Contact Richard Parker | Visit Website | About The Author

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Question:
I am not sure whether to buy assets or shares? What's the difference?

Answer:
You want to buy assets NOT shares. Sellers will want a stock purchase because it will eliminate their future liability. As a buyer you will want an asset purchase to accomplish just the opposite. The first thing you should know is that nearly every small business purchase is an asset purchase, and so it is the norm. Here is a recap of the reasons why you will want an asset purchase:

In very rare situations, a stock purchase may be your only option. This can happen when the business has certain licenses or permits in place that are crucial to the business but may not be transferable and it would be prohibitive for you to try to obtain the same licenses. In this case, you can complete a stock purchase but there are two things you need to do:

Asset sales are the norm. It's to your advantage. Unless you have absolutely no choice but to make it a stock purchase simply to operate the business, don't do it!

Get more expert advice in Richard Parker's How To Buy A Good Business At A Great Price - the most widely used reference resource and strategy guide for buying a business.

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About The Author
Richard Parker is the author of: How To Buy A Good Business At A Great Price, the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center.

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