In a takeover where consideration is provided in the form of shares,shareholders in the target company are able to defer a potential capital gains tax liability until the shares in the acquiring company they accepted as consideration are sold.

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When shareholders in the target company receive shares in the acquiring company as consideration in a takeover, they are not immediately subject to capital gains tax. Instead, they are able to defer the tax liability until they sell the shares they received. This is because under tax laws in many jurisdictions, the transaction is treated as a tax-neutral exchange and the cost basis of the shares in the acquiring company is the same as the cost basis of the shares in the target company.

In a Takeover Where Consideration Is Provided in the Form