Although one of the main nontax considerations for the buyer in desiring an asset purchase is the risk of being saddled with unknown and contingent liabilities, the impact of this problem can sometimes be ameliorated by the establishment of holdback arrangements. Such arrangements typically involve escrowing of funds, rights to offset payments on seller financed promissory notes, execution of nonnegotiable promissory notes to evidence seller financing, and provisions in the sale agreement in delaying the payment of the full purchase price until certain contingencies have been satisfied. In a typical stock acquisition the purchaser acquires the stock from the corporate shareholders in exchange for cash, notes, stock, other property, or a combination of these items. For example, if a key management figure has an ownership interest in the corporation, it may be beneficial for the corporation for him to retain that interest in order to maintain continuity of management and the value of a key employee. The psychological and economic advantages of having an important employee continue to own a stake of the business, even after new ownership of the majority of stock, should be carefully weighed.
Simplicity is perhaps the key nontax feature of a stock acquisition.
Since nothing other than corporate stock of the corporation is transferred, the often cumbersome preparation and execution of documents of transfer are not necessary. Although the selling shareholders must agree to sell their corporate stock, no shareholder votes are necessary, nor are there any shareholders' dissenters' or appraisal rights. The sale of corporate stock will normally avoid sales taxes, although Florida does impose a tax on the transfer of stock. It must be emphasized that the mechanical ease of accomplishing the actual corporate stock transfer should not lull the purchaser into believing that an investigation into the corporation is not necessary. To the contrary, the investigation should be at least as, if not more, comprehensive than one undertaken in the course of an asset transaction.