After a buyer completes the stock purchase of a seller, what is the status of the seller?

When a buyer acquires the stock of a seller, the seller's legal structure remains intact, but its operational relationship with the buyer changes. This results in the seller becoming a subsidiary of the buyer. Essentially, the buyer now holds a controlling interest in the seller, allowing it to influence or dictate the subsidiary's strategic decisions while retaining its overall corporate identity.

This transformation is significant because it illustrates how ownership affects the relationships and organizational structures in M&A transactions. The seller operates under the umbrella of the buyer's corporate governance, integrating its resources and strategies while maintaining its original brand and operational framework.

In contrast, the other options inadequately reflect the legal and operational realities following a stock purchase. A seller cannot be classified as simply a separate entity since, following acquisition, it operates with the buyer's direction. It does not transform into a division of the buyer, as divisions typically refer to wholly owned subsets that may not maintain distinct legal identities. Lastly, stating that the seller remains an independent company neglects the implications of stock ownership, which directly influences autonomy and operational direction.