Even with the help of a manufacturing business broker, one of the most difficult decisions you will ever have to make is that on choosing an acquisition agreement. This mostly happens when selling to another business. So-Cal Business Brokers has handled all manner of business acquisition. We are in the best position to guide you through the sale of your manufacturing business and also help pick the best acquisition agreement. All in all, all we give are recommendations and it is up to you to make the final decision.
Acquisition agreements are an important part of the process of selling a business to another company. Although the transaction itself will vary depending on the size and type of businesses that are involved, the acquisition agreement will take one of two forms: entity purchase agreement or asset purchase agreement. Our manufacturing business brokers will be happy to help you understand the difference.
- Entity purchase agreement
This agreement is also referred to as stock purchase agreements. With this type of agreement, the buyer will buy your business by purchasing the majority of your stock. What this means is that the new owner will assume all your obligations and debts. Based on your reasons for selling we will be happy to let you know if this is the right agreement or not.
- Asset purchase agreement
With this second type of purchase agreement, the buyer will buy your manufacturing business’ assets; this includes both tangible (office equipment, real estate, and inventory) and intangible (patents, copyrights, trademarks, and trade secrets) assets. This means you will retain the shell of your business although there is no business left to run. When the assets are all gone you have no option but to close.
Acquisition Model to Use
When choosing an acquisition agreement it is imperative that you consider the issue of liabilities and taxes. If your main concern is taxes, the asset sale will be better than the entity purchase agreement. This is because you can start depreciating your assets sooner. You will pay taxes at the low long-term capital gain rate. The job of our manufacturing business brokers is to ensure you don’t end up with the case of double taxation.
Your choice of acquisition arrangement will determine how ownership will be transferred and if leases can be transferred or assigned to the new owner. Our team at So-Cal Business Brokers has handled many sales. We will help you determine the best acquisition model for your business and ensure you close at the best price. Contact us today to learn more about our services.