When You’re Selling Your Company: Key Choices, Key Moves

June 2006
by Howard W. Fisher and Daniel R. Siburg

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After careful consideration,
you have decided to sell your publishing company and turn your equity into
cash, diversifying your personal wealth. Two basic types of transactions are
available, each with numerous ways of meeting buyers’ and sellers’ various
needs.

 

An asset purchase is the most
common form of business sales transaction involving small to midsized
publishing companies. The buyer acquires only selected assets of the seller’s
company, primarily intellectual property and everything related to production,
marketing, sales, and the inventory. Asset-purchase sales transactions provide
tax benefits and liability protection to buyers and generally result in a
higher price for sellers than stock sale transactions.

 

For a stock sale, the seller’s
company must be a corporation. The buyer acquires the whole company and its
stock and assumes all assets and liabilities of the business along with
ownership. A stock sale usually provides tax benefits and liability protection
to the seller, but the purchase price is generally at least 25 percent lower
than it would be in an asset sale, because the buyer does not receive the tax
benefits of expensing the assets over time.

 

If a business is prepared for a
sales transaction, as discussed in earlier installments of this series, the
sales process generally takes 6 to 18 months from start t…IBPA Members – Click here to view the full article (login required).

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