Ep. 87 | Tax & Legal Considerations When Selling A Business

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In this episode of the Teaching Tax Flow Podcast, hosts Chris and John are joined by guest, Jim Cunningham, and jump deep into the intricacies of selling a business. With a focus on empowering listeners to minimize tax liabilities while navigating significant legal considerations, this episode is a must-listen for business owners considering a transition. Brought to you by Legacy Lock, the episode provides a roadmap to understanding essential components of business sales, including asset vs. stock sales, the timing of business transitions, and the legal and tax advantages of different transaction structures.

The conversation kicks off with the importance of planning when selling a business and dives into the differences between asset and stock sales. Jim emphasizes how critical it is to prepare well in advance by consulting with financial and legal advisors. The episode also explores the pros and cons of seller financing, the impact of goodwill and enterprise value, and strategic considerations for both buyers and sellers to ensure a smooth transition. With real-world anecdotes and expert advice, this episode provides actionable insights for turning business transitions into lucrative opportunities.

Key Takeaways:
  • Importance of Early Planning: Engaging with tax advisors and legal professionals well before the planned sale can significantly enhance the value and smoothness of a transition.
  • Asset vs. Stock Sale: Asset sales are generally preferred for liability reasons, but specific business conditions may necessitate stock sales.
  • Seller Financing: Offering seller financing can spread the capital gain tax burden over time, making it an attractive option for sellers who don’t need immediate cash.
  • Determining Enterprise Value: Goodwill and the ability to generate earnings are crucial to establishing a business’s enterprise value.
  • Post-Sale Involvement: Structuring deals with earnouts and consulting roles can help ease the transition and ensure continued business success.

Episode Sponsor:
Legacy Lock (www.teachingtaxflow.com/legacy)
  • (00:00) - Chapter 1
  • (00:04) - Tax and Legal Considerations When Selling a Business
  • (04:23) - Strategies for Business Transition and Asset Sales
  • (14:14) - Asset Versus Stock Sales in Business Transactions
  • (21:39) - Legal and Financial Tips for Selling or Buying a Business
  • (31:05) - Building Your Personal Board of Directors for Business Success

Creators and Guests

John Tripolsky
John Tripolsky
VP of Marketing, Teaching Tax Flow
James Cunningham
James Cunningham
Member, Dickinson Wright LLP
Ep. 87 | Tax & Legal Considerations When Selling A Business
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