Three key benefits of a Stock Purchase acquisition structure

1. Stock Purchase acquisition structure may be less complicated than an asset purchase structure,
in that the parties usually do not need to list specific assets and liabilities, since the acquiring
party is purchasing all the assets and liabilities of the target company, rather than just certain
assets.

2. Stock Purchase acquisition structure allows the seller of the target company to divest the entire
business.

3. Tax on the sale of equities in a stock purchase is often assessed at the capital gains rate, which
is lower than the ordinary income tax rate that would be assessed in an asset purchase.

One major drawback of a Stock Purchase acquisition structure

1. Acquirers in a stock purchase acquisition are incapable of benefiting from a stepped-up basis
in the target’s assets. Stepped-up basis can often reduce the taxes owed up by a acquirer, since it
raises the basis that a seller has paid, and allows them to report that they have earned less capital
gains income from the transaction. This means that TAS Holdings LLC, as the acquirers in a
stock purchase, may have to pay more taxes than if they were participating in a asset purchase.

Three key benefits of a Asset Purchase acquisition structure

1. An acquirer may be able to just purchase some assets and not all assets of the target company
and have some liabilities remain with the seller, although courts and statutes may counteract this.
TAS Holdings LLC could therefore have some liabilities held with Ellers Construction, LLC.

2. Sellers may reduce tax burden by making the transaction a 1031 exchange, which essentially
allows the seller to reinvest proceeds from asset sales into buying other similar assets and
therefore defer paying taxes on the asset sale.

3. A seller can demand a higher purchase price for an asset purchase compared to a stock
purchase because they have an increased tax burden, resulting in part from that assets in an asset
purchase are often depreciated. This may be a disadvantage for TAS Holdings though, as it
means that Ellers Construction, LLC, may have to be paid more for their asset to compensate
them for their increased tax burden if we use an Asset Purchase acquisition structure.

One major drawback of a Asset Purchase acquisition structure

1. Asset Purchase transactions typically require parties to submit more documentation than is
required for a stock purchase, and therefore may increase transaction costs.