How the structures differ
In a statutory merger, one company combines into another under state corporate law, and the surviving entity generally takes on the assets and liabilities of both by operation of law. Many deals use a subsidiary of the buyer, and when that subsidiary merges into the target, the target survives as a subsidiary, which can make it easier to keep existing contracts and permits. A stock purchase also leaves the target intact, but it requires each selling shareholder to sign on unless another mechanism brings in holdouts. An asset purchase lets a buyer choose which assets and liabilities to take, although some liabilities may follow the business anyway under successor liability doctrines. Tax consequences differ sharply among these forms, which is why the tax analysis often drives the choice.
Information that shapes the choice
Gather the target's material contracts and check each for anti-assignment and change of control provisions, because the structure determines which ones are triggered. Permits, licenses, and real estate leases may need consents or new applications depending on the form. The capitalization table and any shareholder agreements show whether every owner can be brought along and whether drag-along rights exist. Known and potential liabilities, from litigation to tax to environmental issues, affect how much risk a buyer is willing to inherit. Employee benefit plans and union agreements also respond differently to a merger than to an asset transfer.
What gets decided at the outset
We work through which structure delivers the business the buyer actually wants with the fewest consents and the most manageable inherited risk. For sellers, the analysis often centers on tax treatment, how proceeds are paid, and what liabilities they keep after closing. Mergers usually require board and shareholder approval under the governing corporate law, and dissenting shareholders may have appraisal rights. Regulatory filings, such as antitrust notifications for larger deals, can affect timing whatever form is chosen. Once the structure is set, the deal documents follow from it, so changing course late tends to be costly.
