Posts tagged due diligence; assets and liabilities.
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3 minute read
Acquirers of businesses often prefer to buy the assets of a seller, rather than the stock, to avoid assuming the seller’s liabilities. Indeed, the general common law rule is that a purchaser of assets does not assume the seller’s liabilities absent an agreement to do so, fraud or other inequitable conduct between the parties, whereas in a stock sale, the buyer steps into the shoes of the seller and assumes all assets and liabilities of the seller. In an asset sale, the seller, in turn, would typically use part or all of the sale proceeds to pay its liabilities. During the pre-sale due ...
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