Three general forms can be used for the acquisition of a business:

(1) a purchase of the assets of the business,

(2) a purchase of the stock of the company to be acquired (aka target) owning the assets, and

(3) a statutory merger of the buyer (or an affiliate) with the target.

It is possible to combine several forms so that, for example, some assets of the business are purchased separately from the stock of the company that owns the rest of the assets, and a merger occurs immediately thereafter between the buyer and the acquired company.

Alternatively, a transaction may involve the purchase of assets of one corporation and the stock of another, where the same seller owns both corporations. As discussed later, it is worth keeping in mind that “asset purchase” or “stock purchase” treatment for tax purposes may be different from the legal form as an asset purchase, stock purchase, or merger.