After Tax: Calculating Your Net Proceeds from a Proposed Sale
After you have received a valuation on your company (by receiving an offer to purchase your business or by an independent appraisal), you should talk with your tax adviser to estimate your tax consequences of selling either the stock of your company or the company’s assets. You might be surprised by the difference in how much you will actually take home following the sale of stock compared to assets. The tax consequences to your particular business will depend on a number of factors, so ask your tax advisor to run estimates under both approaches. Armed with this information you will be able to estimate if the sale will leave you with enough liquidity to fund your lifestyle in retirement or capitalize your next venture. Also, if there is a significant differential between the two approaches, you might ask to restructure the proposed purchase or demand a tax true-up to make up the difference in the tax consequences between a stock or asset deal.