| When selling a business, you will need to negotiate | | | | relationships as the buyer acquires the business. |
| and structure the sale to the satisfaction of both | | | | The buyer or seller may also negotiate to have |
| you and the buyer. There are many nuances to | | | | certain assets or liabilities excluded from the sale. |
| structuring a sale, but in general the two types of | | | | For example, the buyer may wish to avoid taking |
| sales are asset sales and stock sales. | | | | responsibility of some debts, or the seller may |
| Most sales, especially of smaller businesses, are | | | | want to keep the company car. Stock sales are |
| asset sales. In an asset sale, the buyer takes | | | | most common among sales of C corporations, to |
| possession of the company's assets, such as the | | | | avoid double taxation of the corporation and the |
| land and building, equipment, and inventory, but | | | | shareholders. |
| does not become responsible for any of the | | | | In relation to taxes, a sale structure that is |
| company's liabilities, such as debts or legal claims. | | | | beneficial to the buyer is typically harmful to the |
| The seller uses the proceeds of the sale to | | | | seller, and vice-versa. Deals that pay off the seller |
| resolve the liabilities. An asset sale typically favors | | | | quickly generally result in high taxes for the seller, |
| the buyer. | | | | and low taxes for the buyer, whereas more |
| In a stock sale, the company's assets, liabilities, | | | | long-term arrangements favor the seller over the |
| and stock are transferred to the buyer. In | | | | buyer. Both the buyer and seller should work with |
| general, a stock sale benefits the seller; however, | | | | a CPA and a business attorney to negotiate the |
| it can also provide greater continuity in business | | | | sale to their mutual satisfaction. |