Stock Sale (Equity Sale)
A transaction where the buyer purchases the ownership interests (stock or membership units) of the entity itself. The buyer inherits all assets AND all liabilities. Sellers prefer stock sales because proceeds are typically taxed as capital gains. Buyers bear more risk.
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Related Terms
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Enterprise Value (EV)Seller's Discretionary Earnings (SDE)EBITDA MultipleQuality of Earnings (QoE)Add-BacksDue DiligenceLetter of Intent (LOI)Holdback (Escrow)Earn-OutAsset SaleGoodwillPersonal GoodwillCommunity PropertySeparate PropertyPereira MethodVan Camp MethodTransmutationBuy-Sell AgreementShotgun Clause (Russian Roulette Clause)Right of First Refusal (ROFR)View all →