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What is a stock-for-stock merger?

This type of merger is cheaper and more efficient because the acquiring company does not have to raise additional capital for the transaction. A stock-for-stock merger does not impact the cash position of the acquiring company. There are various ways an acquiring company can pay for the assets it will receive for a merger or acquisition.

What is a stock acquisition?

In a stock acquisition, a buyer acquires a target company’s stock directly from the selling shareholders. Under this structure, the buyer is assuming ownership of all of the target’s assets and liabilities, including potential liabilities from past actions of the target.

How does a stock acquisition differ from an asset acquisition?

A stock acquisition differs from an asset acquisition in many ways, the most notable of which is that there are usually better tax-reduction options via an asset acquisition. However, a stock acquisition is usually more practical and easier transact.

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