Practical and legal tips on whether to buy a company's stock or its assets when buying a business
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Purchase of company, sale of company, purchase of business, sale of asset, sale of asset, sale of share, purchase of share, sale of business, transfer as continuing company, TUPE regulation
Article body:
When looking at a company or business purchase, the buyer's answer will usually be faster and easier to buy more cost business assets For sellers, usually to sell business shares It will be a more effective tax. The reasons for this view are outlined below. In our opinion, selling business assets rather than stocks (ie business sales) usually results in faster and more cost-effective deals as financial aid rules do not apply to the sale of assets (see below) And
Legal effect
Where buyers get the share of the target, the target receivables will remain in their share, hence the broad guarantee and announcement will be the buyer's legal status In purchasing the asset, the target's responsibility will be in the seller's hands The rest, the buyer has a great range on cherry blossoms, which she or which asset he wants to get. In fact, the "clean break" from the business is the finish of the post from the seller despite the structure buyers are often used to gain business
Consideration
In company sales (share sales), the purchase money goes into the hands of individual shareholders. Where the asset sale takes place, the proceeds will come to the target. Scenarios have been adopted depending on the application for tax considerations that are clearly different.
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If a stock sale takes place, all assets owned by the company remain with the company and transfer of ownership of the assets is not an issue. If the transaction is configured as an asset sale, especially if the consent of a third party is required (usually a lease transfer), there are employees (complex rules transfer of employment protection-"TUPE rule delays occur. If so, the solution can be properly deployed so that the ownership of the asset is ultimately transferred to the buyer.The extent to which this is a viable solution is how the relevant asset is based on the business Solutions that are viable for buyers and sellers
employee
If the buyer wants the seller to continue the business, as a matter of practicality, it makes little difference whether stock sales or asset sales will be made, and in either case, the buyer has an employee and its unpaid rights "Inherit" (under TUPE rules).
Such situations protect both the buyer and the seller from potential employee claims, if the asset sale is intended to be carried to the business
Tax
Stamp duty
The obligation to pay for the share transfer is currently 0.5%. The obligation to pay for the transfer of certain assets, including freehold or leasehold properties, can now go up to 4%.
Capital gains tax by individual shareholders-stock sale
The issue to keep in mind here is that the seller directly receives the consideration for her or his stock.
To sell the product to the maximum possible tax effect to be salvaged, the dramatic impact tapers relief. This can reduce the capital gains tax liability to less than 25%.
Corporate tax-asset sale by company
The company has two tax points selling its assets. First, a company may suffer from capital gains from the sale of capital when it discards the assets associated with the buyer. Second, the remaining consideration was held that the company needed to acquire to shareholders. If the net income is distributed by winding up the company the shareholders are treated as a disposition of their shares for the purpose of capital gains tax. If the dividend is distributed as a dividend, this includes additional tax obligations for both companies and individuals who will receive the dividend.
Financial support
A company can not provide direct or indirect financial assistance to those who acquire the company's shares. Usually this occurs when the buyer wants to acquire the company's stock, and the buyer arranges for the company to charge its assets to the bank fund's stock purchase Allows the company to give this assistance There is a mechanism to do that, but it can be expensive and time consuming.
The rules on financial support do not apply to asset sales.
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