Sale of a Business

I own a business that I would like to sell. My business is operated through a corporation and I have shares of stock in the corporation. How should I structure the sale?

The structure of the sale of a business is dependent upon a number of variables including the entity that owns the business, the desires of the seller, including whether he or she would like to divest himself or herself completely of the business or continue with it in some capacity, and the long and short term desires of the buyer.

Generally, for a business operated through a corporation, the axiom is that sellers sell stock and buyers buy assets. Sellers desire to sell the stock in the corporation because they can generally get capital gains treatment for tax purposes and divest themselves entirely of the business and its liabilities. Further, by transferring the stock through a merger or certain other corporate re-organizations, the seller can defer the recognition of tax on the sale until a later date. Finally, if the seller sells assets of a corporation, the corporation must pay tax on the sale and the shareholder owners usually must pay a second tax to have the proceeds of the sale distributed to them from the corporation.

Buyers generally desire to buy assets because they can depreciate the purchase price over a shorter period of time than they can if they buy stock, and they can pick and choose the assets they wish to purchase and the liabilities they are willing to assume. The buyer and seller must reach a balance between their two goals for a transaction to be successful.

Our Business attorneys have worked through complex and simple sales of businesses and can find creative ways to find the common ground between the desires of the buyer and seller and reach fair resolutions in the sale of your business.

For More Information Contact: David E. Myre, Jr.

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