Startup Fundamentals – Business Models, Customer Validation & Market Strategies Practice Test

The term used for an acquisition where the buyer purchases the entire legal entity is "Stock Purchase." In a stock purchase, the buyer acquires the shares of the company, which means they are taking ownership of the whole organization, including its assets and liabilities. This transaction structure allows the buyer to assume control of the entity and all its rights, including contracts, permits, and other legal considerations associated with the business. A stock purchase differs from an asset purchase, where only specific assets and liabilities are bought, rather than the entire company. In an asset purchase, the buyer has the option to choose which assets to acquire, which may exclude certain liabilities. The terms "share purchase" and "equity purchase" can be variations used in certain contexts but typically signify the same fundamental action of obtaining ownership through shares. However, "stock purchase" is the more universally recognized term for this type of acquisition, making it the correct choice in this scenario.