Interview Question that I was just asked... Please help! - Explanation?

http://www.bizquest.com/resource/basic_deal_structures__stock_purchase_vs_asset_p-23.html

When in doubt, the answer is "taxes".

If you buy equity, you're buying the company's assets and liabilities. But the assets only and you can avoid the liabilities. Asset only structure can be preferred where you don't need to take the liabilities or some other aspects of continuity to continue the business.

http://macabacus.com/accounting/types-of-acquisitions

there's 3 different ways the acquirer could purchase a target - cash, stock, or debt and generally: 1) cash is cheaper than debt BC interest rates on cash are usually under 5% whereas debt is typically much higher (therefore, forgone interest on cash is almost always less than the additional interest paid on debt for the same amount of cash or debt) 2) cash is less risky than debt because there's no chance the buyer might fail to raise funds from investors 3) cash is less risky than stock because the buyer's share price could change pretty dramatically once the acquisition is announced