This is about to get real nerdy but this is crucial if you’re trying to sell a company. It could literally save you millions of dollars.
In an asset sale, you’re selling the assets of the company as opposed to the company itself.
You’re basically selling off ownership of the company.
I’ll oversimplify it a bit, but let’s take a $5m offer.
The reality is, in a $5m asset sale, I’d have walked away with $1.4m. Yay money, but nowhere near as cool or interesting as the original $5m.
svb.com/blogs/ann_lucc…
Sweet beard of Zeus. Yes, tax. freaking. free.
So, if we go back to my $5m example from earlier, instead of losing 57% of the purchase price to taxes, I’d only pay 5%.
Simply changing the type of sale more than doubled what I’d take home.
I’m not sure if there are any similar mechanisms in place for those types of entities.