Legal Question in Business Law in Illinois

If you are purchasing an S Corp , do you want to get the stock as well? The biggest concern I have is do I want to acquire the stock in this deal or just the assets. My company is an S Corp and the company we plan to acquire is an S Corp located in Florida. We plan to purchase the inventory, trademarks, websites, copyrights and image library. No real estate/buildings are involved.

Asked on 11/11/19, 1:29 pm

1 Answer from Attorneys

David K. Staub Staub Anderson LLC

Most acquisitions by small businesses are asset purchases for various tax and liability issues. Assuming that there are no significant assets that are unable to be transferred (such as non-assignable contracts or business licenses), there is little reason from a buyer's standpoint to buy the stock. If you are suggesting that you buy both the assets AND the stock, I have never seen that done. It would present a bit of a logistical problem, though it could be solved. If you buy the assets for $100,000, the corporation then has $100,000. At that point, assuming the S corp has no other assets or liabilities, you would need to pay $100,000 for the shares of the S corp since it has that much sitting in cash. Instead, you could wait a day, have the S corp distribute the $100,000 to its shareholder and then buy the stock for $1. But I see no point in doing that. I assume you are working with a business attorney. I suggest you ask what he thinks since he will have a fuller picture of the situation.

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Answered on 11/26/19, 9:01 pm

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