If you want to sell your business in whole or part, you can structure the business sale through an asset sale. Compared to a share sale, an asset sale has certain advantages and disadvantages from your perspective as the seller. This article will explain the key points to consider in an asset sale.<\/p>\n\n\n\n
In the context of business disposal, an asset sale is one of two ways you can structure the transaction. As the name suggests, you sell your business\u2019 underlying assets<\/a> rather than the business entity itself through a share sale. These assets can include:\u00a0<\/p>\n\n\n\n To execute an asset sale, the seller must transfer each of the assets to the buyer according to the legal requirements imposed by the law. For example, a piece of land must be transferred through a conveyance process. However, ordinary property like a machine can be sold according to a sale contract without requiring any other specific documentation.<\/p>\n\n\n\n Suppose you run a manufacturing business through a group of private companies. Despite being primarily a manufacturer, part of your business involves maintaining a large parcel of land that hosts several warehouses other businesses rent from yours.<\/p>\n \n LetCo Limited approaches your business and asks if you would be willing to sell your land and the associated businesses you operate. However, you are not willing to relocate your factory or give up your manufacturing business. Using an asset sale structure, you could cherry-pick the assets you sell such that you only sell the title to the land while retaining ownership of your machines.\u00a0<\/p>\n<\/div>\n\n\n\n There are some advantages to an asset sale that you should consider. <\/p>\n\n\n\n As the above example shows, an asset sale does not obligate you to sell all of the assets that a company holds. Instead, you can sell some of your assets and retain certain rights in other assets. <\/p>\n\n\n\n That said, if you want to retain an asset, nothing is preventing you from transferring the legal title to that asset to a new company and selling your existing company, which holds the remaining assets via a share sale to the buyer, to achieve the same effect. <\/p>\n\n\n\n Though not always the case, if you reinvest the sale proceeds from certain assets, including land, plant and equipment, your business may not have to pay any tax. That said, the law around taxation and business disposals is quite complex. Hence, you should seek clarification from a qualified tax professional. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n\n
Advantages of an Asset Sale<\/h2>\n\n\n\n
Flexibility <\/h3>\n\n\n\n
Taxation <\/h3>\n\n\n\n