Transaction Structures: Stock vs Asset, Merger vs Tender Offer
Chapters in this video
- 0:00 What is being sold vs how it is executed
- 1:10 Stock sale: buying the whole entity
- 1:58 Asset sale: the unfurnished house with a liability shield
- 2:49 Exam trap: double tax for C corporation sellers
- 4:45 Exam trap: contract assignment and counterparty consent
- 5:16 Merger: board approval, shareholder vote, clean path to 100%
- 6:32 Tender offer: direct to shareholders, friendly or hostile
- 7:39 Cash is king: speed, the 20-business-day rule, and why stock kills the timeline
- 8:39 Rapid-fire exam recap
What this video covers
- Why a stock sale transfers the entire entity (known and unknown liabilities) while an asset sale gives the buyer a liability shield plus a tax basis step-up
- Which structure triggers double tax for a C corporation seller, and why that mismatch pushes most negotiations toward a stock sale
- Which structure requires individual contract assignment and counterparty consent, and how a poorly planned deal can lose key customer contracts at closing
- Why a merger requires target board approval plus a target shareholder vote, and why it remains the standard for friendly negotiated deals
- How a tender offer bypasses the board to solicit shareholders directly, and when it can be friendly or hostile
- The multi-step tender offer path: initial offer, back-end merger, and the state statute conditions that can make the back-end merger vote-free
- Why cash tender offers dominate for speed, how the 20-business-day minimum offer period works under the Williams Act, and why stock-for-stock tender offers are rare
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 79 course also includes adaptive practice questions and spaced-repetition flashcards.