How can a seller in a stock deal benefit from future growth?

Receiving acquirer stock and deferring taxes allows a seller in a stock deal to benefit from future growth because it ties their interests to the future performance of the acquiring company. When a seller receives stock instead of cash, they become a shareholder in the acquiring company. This means they can partake in potential future appreciation of the company's stock value, benefiting from any growth in its operations, revenue, or market position.

Moreover, the ability to defer taxes means that the seller does not have to pay capital gains taxes at the moment of the sale. This tax deferral can enhance their overall financial outcome, as they can reinvest the proceeds into the acquiring company's equity, potentially leading to greater gains than if they had taken cash upfront and paid taxes on it. This structure perfectly aligns the interests of the seller with the ongoing success of the acquiring company, ensuring they can benefit from its future growth.

In contrast, cashing out immediately or acquiring assets directly does not create the same connection to the success of the acquirer. Similarly, taking a loan does not provide any equity stake or participation in future profits, which is why those options are less favorable in this context.