According to the general rule, which transaction structure do buyers typically prefer?

Buyers in M&A transactions generally prefer a sale of assets due to several compelling reasons. When a buyer acquires assets rather than stock, they have the ability to selectively choose which assets they want to acquire, enabling them to avoid taking on unwanted liabilities that may be associated with the seller. This approach allows buyers to carry over the value of the acquired assets while often leaving behind any associated risks that come with the company's historical operations.

In the case of a sale of assets, buyers can also receive benefits like the ability to reset the tax basis of the acquired assets, which can lead to depreciation advantages in the future. Furthermore, if the transaction is structured as an asset sale, the buyer might have an opportunity to engage in a more thorough due diligence process focused on the specific assets being acquired, leading to a clearer understanding of what they are purchasing.

While other transaction structures like stock sales or joint ventures might offer certain advantages, they do not provide the same level of control over liabilities and maintain the potential for favorable tax treatment that an asset sale does. Joint ventures and equity swaps serve different strategic purposes and are not typically used for the straightforward acquisition of one company by another.