Chapter 31  What is the difference between a merger and an acquisition? Merger: Two or more companies come together to make a new thing, neither company exists anymore Acquisition/Takeover: One company buys another, target company disappears lawfully  What is the difference between a stock purchase and an asset purchase? Stock Purchase: Buyer purchases shares (very small control) of target company, also buys the legal liabilities Asset Purchase: Buyer purchases assets, tries to leave out liabilities  What is a reverse merger? Transaction in which privately held company buys publicly listed company  What is the general rule regarding whether a company that acquires a seller’s assets is responsible for the seller’s liabilities simply due to the ownership of those assets, and what are the four well-recognized exceptions to this rule? The company that acquires the assets is not liable for their liabilities simply because of ownership Exceptions: Express or implied agreement, De Facto Merger, Mere Continuation, Fraudulent Transaction  What is a hostile takeover? Target company board of directors has no knowledge of a purchase offer, no laws against it  What is a letter of intent? Contract that binds parties to confidentiality and exclusivity during the due diligence phase  What is due diligence? Pre-closing process where the buyer looks at statements and records to identify liabilities of the target  How did the Delaware Supreme Court rule in Paramount v. QVC Network, Inc. (1994)? Affirmed the decision of lower court, applied enhanced scrutiny test, held that Paramount conduct was unreasonable (refused to negotiate with QVC)