Asset or Stock Sale?

“What Am I Walking Away With?”

When selling a company, a determination needs to be made about whether it will be an asset sale or stock sale transaction. In this video, Andrew Labosier, CPA, CVA,   explains the differences between these two options so you can determine which one is right for you.

The team at Anglin Reichmann Armstrong will pursue a different study or calculation process depending on the type of sale, and each results in a different business valuation.

Explore the tax implications of a stock sale vs. an asset sale by connecting with our experienced business valuation team.

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Read about strategies to increase business value.

If you prefer to read this content, the video transcript is below.

One of the largest factors that determines how much a business owner walks away with, is how this how the transaction is structured.

On the most basic level we have stock sales and we have asset sales. Stock sales are straightforward. It’s not unlike you selling a share of Apple. If you sell it for more than you paid for it, you’re going to have a capital gain or loss. With these types of deals, the buyer steps into the shoes of the seller and gets the good along with the bad, the assets and liabilities.

From a tax perspective, these types of deals are more advantageous for the seller because of the capital gain treatment of any gains.

On the other side of the spectrum, we have asset sales. With these types of transactions, the buyer typically only assumes the assets of the company. The liabilities are left for the seller to take care of from a tax perspective.

We typically have both a mix of ordinary and capital gain treatment. These types of transactions are most beneficial for the buyer because they can depreciate the assets that they buy.

If you have any questions on these types of transactions or hybrid transactions, please reach out to our team and let us know how we can help.