Tax Considerations in a Business Sale

Tax structure can swing your net proceeds by 15–30%. The two biggest levers are deal structure (asset vs. stock sale) and purchase price allocation across asset classes.

Buyers prefer asset sales for the step-up in basis and liability protection. Sellers usually prefer stock sales for capital-gains treatment. F-reorganizations of S-corps can deliver the best of both worlds and are increasingly common in SMB transactions.

Rollover equity — where the seller retains 10–30% of the post-close company — can defer tax on the rolled portion and align upside with the new owner. It also signals confidence to lenders.

None of this should be improvised at LOI. Loop your CPA and wealth planner in before signing any term sheet.