Buying and Selling Businesses Through Asset Purchase-Sale Transactions
Many business owners purchase businesses as a means of growth of their company. There may also be individuals who intend to start up their company by buying a business to conduct. Regardless, the buyer is faced with a choice: whether to buy the stock or other ownership units as a means of getting the business, or buy the assets of the business.
Purchasing the stock is an unattractive method for most buyers. When you buy the stock in a company, valuing its business accurately is usually difficult. There may be unknown liabilities, such as a claim held in secret that results in a future lawsuit. Or a claim of which the plaintiff has no knowledge at the time of the transaction. There could also be a tax liability that a future audit uncovers. There are others, as well. Of course, the seller likes this method of purchase and sale, for the seller gets favorable capital gains tax treatment.
Usually, however, the seller will be flexible about the method of purchase and sale, and agree to the other method, a purchase of the assets of a business. A purchase of the assets of a business means much more than buying the equipment and vehicles. You can easily buy everything that you need to conduct the business, including the name of the company, customer lists, supplier lists, and other intangible assets. You can easily, under these circumstances, retain those who have been employed by the business and get a transfer of the lease. In the process of a purchase of the assets, you leave the contingent liabilities in the hands of the seller and his business entity. This method is unattractive to the seller in terms of taxes, and the handling of contingent liabilities. And it is more attractive to the buyer as the assets purchased can be depreciated or amortized.
Call the offices of business and tax law attorney John McDuff at 512.457.1177 to obtain quality services in implementing your purchase of a business. The quality of my work is well recognized by my clients, and I have received the AV rating* under Martindale-Hubbell’s peer review rating system.
With more than 30 years of experience as a business and tax law attorney, as well as a CPA, I am prepared to help maximize value for you, as you consummate deals such as the purchase of assets of a company. I offer personal service that includes 24/7/365 access via my cell phone or email, as well as appointments in the evenings and on weekends. Schedule an appointment with Austin business lawyer John McDuff. Contact us at 512.457.1177 or e-mail.