Whether you structure a sale as an asset sale vs. a stock sale depends on taxes.
Typically, a stock sale is more beneficial for sellers.
However, an asset sale is more beneficial for buyers.
When comparing an asset sale vs. a stock sale, it is critical to remember that there are endless variations of how both parties can create a contract.
Therefore, it’s best to receive professional advice from tax and legal professionals before proceeding with any sale.
When selling assets, the seller transfers a collection of their business’s assets to a prospective buyer.
Sometimes, these assets are tangible, such as furniture, inventory, etc.
In other cases, the acquired assets are intangible, such as the value of a brand, customer lists, etc.
Tax consequences of these types of sales vary depending on the type of corporation.
During stock sales, the buyer purchases shareholder stock directly from the seller.
Again, there are various tax implications each party must be aware of.
Therefore, it is always best to have a professional help you negotiate these deals.
So, what’s better, an asset sale vs stock sale? The answer depends on whether you are a buyer or seller.
Additionally, the type of contract and tax benefits strongly impact which type of sale is best in your situation.
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