Most informed sellers want to sell stock and buyers want to buy assets. The reasons are relatively simple.
From the sellers prospective, given our current tax structure, sales of stock held for more than a year are generally taxed at the preferred capital gains tax rate. So sellers want to be able to keep more of the sales proceeds in their pockets.
The buyers side can be a little bit more complex. Typically a buyer is also motivated by tax considerations. If a buyer purchases the assets of a company, he or she can allocate the purchase price to the various assets and possibly depreciate them. But there is more to the buyer’s side. When a buyer purchases stock, he or she is purchasing all the known and unknown liabilities of that corporation.
If you have questions about this or other valuation matters, please contact me.
©2011 Florida Business Valuation Group
