Disadvantages of Stock Sale

In a stock sale, the buyer has to also accept repayment of all existing liabilities of the business, although this can be adjusted in the stock price. This includes contingent liabilities that were unidentified or undisclosed during the stock sale, which can be eliminated by including terms on warranties and indemnifications in the stock sale agreement. Stock sale cannot be used for business sale of sole-proprietorships or partnerships, as shares are not issued for capital providers, unless these businesses are restructured accordingly for sale.