PSI Oklahoma Real Estate Practice Test

What type of transaction allows a business buyer to acquire all aspects of a business, including identity, rights, and obligations?

1. Asset purchase

2. Stock sale

3. Franchise agreement

4. Lease agreement

The correct answer is: Stock sale

The type of transaction that allows a business buyer to acquire all aspects of a business, including its identity, rights, and obligations, is a stock sale. In a stock sale, the buyer purchases the shares of the company, which effectively gives them control over the entire business entity. This means that the buyer assumes all of the company’s assets, liabilities, contracts, and other obligations as part of the transaction. A stock sale allows for continuity of the business because the structure of the company remains intact, which can be beneficial in terms of maintaining existing agreements, relationships, and identity under the original business. This is different from an asset purchase, where the buyer selectively acquires specific assets and may leave liabilities or obligations behind. A franchise agreement pertains to licensing rights and operational guidelines rather than the complete acquisition of a business as a corporate entity. Lastly, a lease agreement is focused on the rental of property or assets rather than ownership of a business and its associated rights and responsibilities.