There are essentially 5 types of mergers and acquisition. Once the appropriate type of M&A is selected, there are virtually an infinite number of ways that the specific deal can be structured.
The specific deal structure will be determined by the financial, strategic, and tax objectives of the buyer and seller.
1. Asset Purchase
Simplest deal structure in which buyer purchases specific assets from the seller. Buyer pays cash or other assets.
2. Stock Purchase
Buyer purchases shares of the business from the seller’s shareholders. Buyer pays cash or other assets.
3. Statutory Merger
Non-taxable deal structure in which one business absorbs the other business in a merger.
4. Stock-for-Stock Acquisition
Acquirer exchanges its stock for the stock of the acquired company
5. Stock-for-Assets Acquisition
Generally a non-taxable transaction in which the acquirer exchanges its stock for the assets of the acquired business.