Investment Return Illustration: LLC vs. C Corp
First, it is not unlikely that an acquirer will insist on buying the assets of the company rather than the stock. Thus, they buy what is INSIDE the company (i.e. the “assets”), but not the stock of the Company itself. The Company receives the sales proceeds directly from the buyer, incurs and pays the Corporate level tax from the gain on the sale of the assets, pays off any remaining liabilities, and then distributes the remaining cash to shareholders in complete liquidation of the Company.
There are two primary reasons for a buyer to prefer an asset purchase over a stock purchase. …… .. . . . .