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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 an acquisition affect a company's share price?

Over the long haul, an acquisition tends to boost the acquiring company's share price. On the other side of the coin, the acquiring company's stock typically falls immediately following an acquisition event.

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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