Why might a seller choose an asset sale over a stock sale?

A seller may choose an asset sale over a stock sale primarily to select specific assets while avoiding unwanted obligations. In an asset sale, the seller has the ability to choose which assets and liabilities to transfer to the buyer. This means the seller can retain certain liabilities and any assets that may not be desirable for the buyer, potentially avoiding the complexities and risks associated with those liabilities.

This choice can be particularly advantageous if the seller has some obligations that could hinder the value of the company or entail significant future costs. By conducting an asset sale, the seller can essentially “cherry-pick” the most valuable and relevant components of their business that they wish to sell, facilitating a more tailored transaction that aligns with their goals.

Other choices, while they may hold certain appeal in different contexts, do not capture the key strategic advantage of avoiding unwanted obligations that an asset sale offers.