TACTICAL | Different Methods to Sell a Business

Owner's Corner by SYM Financial Advisors

Feb 21 2023 • 5 mins

In this week's episode of the Owner’s Corner Podcast, host Seth Wicker is joined by Melissa Bradberry, aCertified Public Accountant, to discuss the different methods of selling a business. The two dive into the differences between a stock sale and an asset sale and why it matters for both the buyer and the seller. From tax implications to legalities, the duo covers the importance of understanding the terms and the key negotiations that can be made to bridge the gap between a stock sale and an asset sale. With insights into special tax elections and the potential tax burden on either side, this episode is a must-listen for anyone considering selling their business.

On this episode I am joined by Melissa J. Bradberry, CPA, a Director at Baden Gage & Schroeder LLC, one of the largest certified public accounting and business consulting firms in Indiana. With over 18 years of professional tax experience, Melissa has extensive industry knowledge with clients involved in medical industries, manufacturing and service industries, and financial institutions. Melissa joined the firm in 2018 as a tax manager, a role where she was responsible for individual and business clients. She received her Bachelor of Science degree in Accounting and Master of Business Administration degree from Arkansas State University.

"It's pretty simple. If you're the seller and you want to do a stock sale but the buyer wants to do an asset sale, come somewhere in the middle with some special tax negotiation or election to bridge that gap.” Seth Whicker

This week on The Owner’s Corner:

  • There are two main methods to sell a business, stock sale and asset sale.
  • The choice between stock sale or asset sale is driven by taxation and legality.
  • A stock sale is preferable for the seller as it results in reduced tax rates for capital gains.
  • An asset sale is preferable for the buyer as it allows for accelerated depreciation and step up in basis.
  • Negotiations between the buyer and the seller can be made to bridge the gap and make a deal, potentially with the use of special tax elections and additional cash changing hands.

Our Favorite Quotes:

  • "A lot of the questions that I get about somebody selling their businesses, whether I should do it as a stock sale, or an asset sale, what's the difference?"
  • "Just generally, you know, whenever we're talking about the seller, they're gonna want a stock deal, whenever you're talking about, if you're on the side of the buyer, they're gonna want an asset deal."
  • "Whenever you're the buyer, you're wanting to have that asset sale, because then you get, again, some preferential treatment on those assets that you're purchasing."
  • "The key is there's a way to make it work to bridge the gap that it's not an all or none."

Connect with Melissa Bradberry:

About SYM Financial and The Owner’s Corner Podcast

The Owner’s Corner is a show for business owners. In each episode, host and financial planner Seth Whicker sits down with business owners and the professionals that serve them to talk about what it takes to build a business. Our guests come from many industries and walks of life to share their biggest wins, mistakes made along the way, and their thinking about the all-important exit planning.

Email Seth at swhicker@sym.com with questions, comments, and to schedule a one-on-one conversation.

Follow Seth on LinkedIn

Follow SYM Financial on Facebook

Subscribe here:

Apple Podcasts

Spotify

Google Podcasts

TuneIn

Amazon Music / Audible

And, if you enjoy the show, please leave a review on iTunes to help others discover the podcast.

Disclosure: The information contained in this message (including any attachments) is confidential and may be privileged. It is intended only for the recipient(s) named above. If you are not the intended recipient, you are hereby notified that any review, dissemination, distribution or copying of this message is strictly prohibited. If you have received this communication in error, please notify SYM Financial Advisors (“SYM”) immediately and destroy the material in its entirety. All communications requiring immediate attention or action, such as trade requests or other time sensitive matters should not be sent to SYM via email. Internet communications cannot be guaranteed to be secure or error-free as information may arrive later than intended, be intercepted, be corrupted, or contain viruses. This material is not an offer or solicitation to buy or sell any product. The opinions expressed herein are those of SYM and are subject to change without notice. To the extent that performance information is contained in this email, past performance is not indicative of future results. SYM is an independent registered investment adviser. More information about SYM including our investment strategies, fees and objectives can be found in our Form ADV Part 2, which is available upon request.