Stock Purchases

Not through a stock purchase alone, unless a shareholders' agreement gives the majority a drag-along right that requires the others to sell on the same terms. Without one, the buyer can take only the shares offered and accept minority co-owners, or the parties can consider a merger, where objecting shareholders may be entitled to fair value.

Often, yes. Many commercial leases treat a change in the tenant's ownership as an assignment that needs the landlord's consent, even though the tenant company stays the same. Closing without that consent can put the lease in default, so we read the lease early and build the consent into the closing plan.

Sometimes. A 338(h)(10) or 336(e) election, or an F reorganization before closing, can give the buyer asset-purchase tax treatment while the business keeps its contracts and permits. The elections have their own requirements, including a minimum share of the stock purchased and, for an S corporation, every shareholder's consent. Because they can change the seller's taxes, the CPAs decide whether one fits, and the price often moves with it.

The corporation still owes them, and the buyer now owns the corporation. Most stock purchase agreements require the seller to pay off the company's loans from the price at closing, using a payoff letter from each lender. Liabilities that surface later are handled through the seller's representations and indemnities.