Business law

The difference between an Oklahoma asset purchase and a stock purchase

Two common Oklahoma agreements that are used in the sale of businesses are:

1. a Stock Purchase Agreement; and

2. an Asset Purchase Agreement.

While there are many similarities between these 2 agreements, there are some fundamental differences.

A Stock Purchase Agreement is used when the buyer is going to purchase all of the owner’s interest in the company that owns the business. For example, if you are buying a restaurant and the restaurant is owned by Smith Corporation, in a stock purchase you would buy all of the outstanding stock of Smith Corporation. By purchasing all of the outstanding stock, you end up stepping into the shoes of the previous owners. That means all assets and liabilities that the previous owners have, you now have except for anything that is expressly excluded in the asset purchase agreement.

An Asset Purchase Agreement is used when a buyer wants to only purchase specific assets of a business rather than the entire business. For example, purchasing the restaurant mentioned above through an asset purchase agreement would probably mean purchasing the physical location, the inventory and equipment, goodwill associated with the restaurant, and perhaps other information related to customers. In an asset purchase agreement, the buyer is only responsible for the assets he purchases and the liabilities that come with those assets.

It is important to note not only the difference between an asset purchase agreement and a stock purchase agreement but also when to use each type of agreement. If you have any questions about using asset purchase agreements or stock purchase agreements please feel free to contact me, I have worked on many.

Posted by Shawn Roberts in Blogposts, Business Law