Types of Business Sales Your Business Broker Will Recommend

A business broker San Diego plays a very important role when it comes to the sale of a business. His work is not just to market your business but also to give you guidance throughout the sale. The broker will serve as a consultant and also help with business valuation as well as help quality buyers and help with the negotiations. During the sale, the business broker will also help you determine the right type of sale you should consider. He can recommend that you sell the assets, stocks or both. The option he recommends will mostly depend on the nature of your business and your preferences.

Basically, businesses are purchased as an asset or as a stock purchase. Most of the sales are, however, treated as asset sales. As a matter of fact, if your business is an LLC, partnership or sole proprietorship, the transaction is always going to be an asset sale. The sale changes when it comes to corporations. Although some sales of corporations can still be asset sales, the structure of the corporation may also mandate a stock sale. As aforementioned, business brokers San Diego will advise you on the right/best type of sale.

Asset sale
Buyers want to buy assets whereas sellers want to sell stock for better tax treatment. When you purchase assets versus stocks as a buyer, you will be leaving behind the potential of hidden liabilities. As a result of this, it is less risky for buyers to purchase business as assets than as stocks. In addition to that, a buyer has to allocate most of the sale to the tangible items which depreciate over time. You will have to write up and allocate the sale price to the intangibles like non-compete agreements, consulting agreements and goodwill.

Stock sales
This option is available to the corporations. The option is preferred by sellers so as to avoid the risk of double taxation. It also eliminates the risk of hidden liabilities on the part of the seller. Stock sales are also used to help a company generate funds.

The option you end up choosing will mostly depend on the nature of business as well as what you want to achieve at the end of the day. The best thing is that your business broker San Diego will guide you throughout the sale process. You only need to make sure that you hire a broker that has sold businesses that are similar to yours.

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