A stock purchase is a transaction in which an investor buys shares of a company, thereby acquiring ownership of that company. This type of purchase allows the buyer to take control of the company’s assets, liabilities, and operations.

Characteristics:

• Ownership Transfer: The buyer acquires ownership of the company through the purchase of its stock.
• Liabilities Assumed: The buyer typically assumes all existing liabilities of the company, including debts and obligations.
• Control of Operations: The buyer gains control over the company’s management and operational decisions.
• Regulatory Compliance: The transaction may require regulatory approvals, especially if the company is publicly traded.
• Tax Implications: The tax treatment of stock purchases can differ from asset purchases, potentially affecting the buyer’s tax liabilities.

Examples:

• A private equity firm purchasing 100% of the shares of a technology startup, thereby gaining full control of its operations and assets.
• An individual investor buying shares of a publicly traded company, which allows them to participate in the company’s growth and profits.
• A larger corporation acquiring a smaller competitor by purchasing its outstanding stock, leading to an expansion of market share and resources.