We have previously discussed the advantages and disadvantages of ‘A Share Sale’ as well as the advantages and disadvantages of ‘An Asset Sale’, and today’s blog post sees our third and final article on the Shares vs Asset Sales debate, where we will be concentrating on what other options are available to you.
Part 3 – A combination of the two options
Another option, albeit more complicated, may be to arrange a pre-sale hive down. Here the trade, assets, liabilities and tax losses are transferred into a new wholly owned subsidiary and the sale is effected by selling the shares in the new company.
The advantage to the purchaser is that the new company is “clean” and hence there is less commercial risk and also any assets which are not required can be left behind.
However, great care does need to be taken to ensure unexpected tax liabilities are not created when the new company is sold. In particular, beware of any capital gains which could crystallise on the sale of the new company. It may be possible to avoid this but the rules are complex. Also if trading losses are being transferred it is important to ensure that the trade is carried on long enough in the new company for them to be eligible.
Obviously this method does have its advantages but it can be much more complex!
If you would like to learn more about the different options available to you when you come to sell your incorporated business, or if you would just like further information on anything mentioned in the previous three blog posts, please feel free to get in touch with Sibbalds on firstname.lastname@example.org or 01332 242257.
*The Information on this website is intended for guidance only. It is based upon our understanding of current legislation and is correct at the time of going to press. Please note that all businesses are different and you should seek professional advice for what is the best option of disposal for your incorporated business from a Firm of Chartered Accountants.
*Image sourced fromhttp://upload.wikimedia.org/wikipedia/commons/thumb/a/a3/Handshake_%28Workshop_Cologne_%2706%29.jpeg/601px-Handshake_%28Workshop_Cologne_%2706%29.jpeg