BVX Knowledge Base
BVX Knowledge Base
M&A University

Stock or Asset

See Deal Structure for general discussion.


BVX permits business valuation based on an Asset purchase of the business or a Stock purchase of the business. In either case BVXdetermines the Enterprise Value, not the Equity Value. Equity Value of the business is the difference between of the Enterprise Value determined by BVX and the non-operating balance sheet that is excluded in BVX valuation. For more discussion see Definitions of Price, Balance Sheet and Profit.


Asset purchase vs. Stock purchase differences are as follows:


1) In an Asset purchase goodwill is amortized over a period of 15 years and the amortization reduces taxable income. In Stock purchase goodwill amortization does not impact taxable income.

2) In an Asset purchase fixed assets are recorded on buyer's acquisition balance sheet at their negotiated value allocated to the fixed assets(which is often fair market value) and this value is depreciated. In a Stock purchase the fixed assets are recorded on buyer's acquisition balance sheet at their carrying cost on seller's books, and this value is depreciated. See Old Fixed Assets Write-Off for the depreciation life of the assets.

3) BVX deducts corporate level taxes on corporate gain upon sale of the business at the end of the planning horizon if such sale is an Asset sale. No such taxes are deducted at the corporate level in a Stock sale. By default BVX assumes that if the purchase is an Asset purchase, the exit sale is also an Asset sale. Similarly, if the purchase is a Stock purchase, the default assumption is that the exit sale is also a Stock sale.  Internal Settings allow the user to a) change the default setting of deducting corporate level taxes on sale to not deducting them, and b) change the exit sale type so that if the purchase is an Asset purchase the exit sale can be a Stock sale.

4) BVX calculates Real Estate financials but does not value the Real Estate. In an Asset purchase BVX depreciates the real estate over 39 years. In a Stock purchase BVX depreciates the book value of the real estate over a period specified by the user.