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Selling a business

One of the questions that we get from business owners is "if I am going to sell my business, do I sell the shares in my company, or do I sell the business and keep the company?"

From a business purchasers perspective, most will be keen to purchase the business and set up a new company (or other entity).

This is mainly due to the fact that if you purchase an existing company, you also purchase any skeletons that may be hiding in the closet of that company.  These can include such things as unknown creditors or an insurance claims against the company that arises years down the track.

Having said that, sometimes a purchaser will be happy to purchase either the shares in the trading company or the business.  If this is the case, you as a sellor need to put some thought into what is the best scenario for you!

Probably one of the biggest considerations in this area is the capital gains tax treatment of the business sale.  In some circumstances there are signifcant capital gains tax benefits of selling one way or the other.

The best option for any business owner looking to sell a business that operates through a company structure is to seek expert advice relating to your particular situation.  As with all these matters it is vital that you get this advice before the settlement of the business, rather than seeking advice after the dust has settled on your business sale.

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