What Is Involved in Selling A Business? | TheLedger.com

Q: What issues should I be aware of when selling my business?

A: Today's historically low interest rates are encouraging businesses to grow by acquiring proven winners with inexpensive capital. While the salient issues vary on a case-by-case basis, all individuals selling a business should focus on the transaction's structure and the seller's representations and warranties in the purchase contract.

There are two basic transaction structures: "stock sales" and "asset sales." Sellers prefer "stock sales" because, generally, the buyer assumes the business's liabilities and the seller often pays the more favorable capital gains tax rates on the purchase price. A "stock sale," however, rarely allows a buyer to increase the acquired business's tax basis in its assets. Conversely, buyers prefer "asset sales" because, generally, the buyer does not assume the business's liabilities and the buyer may increase its tax basis in the business's assets. Unfortunately for sellers, "asset sales" often require the seller to pay ordinary income tax rates on at least a portion of the purchase price. Determining what transaction structure best suits your needs, and is mutually acceptable, is the first step towards a successful sale.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.