Series 79 practice questionhardStock vs Asset Purchases
A buyer is acquiring a business through an asset purchase rather than a stock purchase. Which type of liability is most likely to be excluded in an asset purchase structure, subject to negotiation?
- APre-closing tort liabilities✓ Correct answer
- BLiabilities under assumed contracts
- CTax liabilities incurred after closing
- DTrade payables that are expressly assumed
Explanation
Why A — Pre-closing tort liabilities
Pre-closing tort and unknown liabilities can usually be excluded in an asset purchase unless specifically assumed. This is a key structure advantage compared to stock deals, where all liabilities transfer by default.
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