Baptiste describes recent activity in the merger-and-acquisition market for private companies and how transactions in the market have been structured as sales of stocks. Reportedly, sellers prefer this format because “they receive capital gain treatment on the entire transaction” while buyers “have been reluctant to purchase stock, as they do not receive a basis step-upon the corporate assets.” Therefore, “the growing popularity of Sec. 338(h)(10) elections to treat stock sales as asset sales for tax purposes has increased buyers’ willingness to enter into stock purchases.” Because a large proportion of private businesses are classified as S corporations and the taxable income of the corporation is taxes to the shareholders, S corp shareholder agreements have various effects on merger-and-acquisition market transactions.