The difference is key, and one company has made headlines for how it’s handling a recent acquisition with vendors.
When software company Amaze acquired the assets of merchandising startup Spring in November 2022, vendors to the latter thought business would continue as usual. Several months later, vendors are claiming that they’re owed thousands with no clear direction on how to get those funds or when they’ll receive them. A rep for Amaze told one of the vendors that the company wasn’t responsible for the payments because it had purchased Spring’s assets, rather than the whole startup. This could be the case.
In this Business Insider article, WilliamsMarston Advisory Partner Michael Curtiss weighs in on the difference between equity acquisitions and asset acquisitions.
“There’s two types of acquisitions,” Michael Curtiss, partner and M&A advisory lead at WilliamsMarston, told Insider. “There’s an equity acquisition where the acquirer will actually acquire the stock and assume all the legal obligations of the acquired company — and then there’s an asset acquisition.”
“Asset deals are often favored by the buyer because the acquirer can specify which assets and liabilities they are willing to assume,” Curtiss said.
“Typically, in an asset deal, the seller remains a legal entity and is still beholden to its liabilities,” he added.
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