Question

Which of the represent disadvantages of a cash purchase of target stock? Buyer responsible for known...

  1. Which of the represent disadvantages of a cash purchase of target stock?
  1. Buyer responsible for known and unknown liabilities.
  2. Buyer may avoid need to obtain consents to assignments on contracts.
  3. NOLs and tax credits pass to the buyer.
  4. No state sales transfer, or use taxes have to be pai
  5. Enables circumvention of target’s board in the event a hostile takeover is initiated.
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Answer #1

NOL and tax credit will be passing on to the buyer in case of cash purchase of a target stock because in this cash purchase of a target stock, when they would be amount of tax credit available then they cannot be availed by the acquiring companies.

All the other options are advantage.

So, the correct answer option (C)NOL and tax credit pass to the buyer.

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