Asset vs. Share Purchase | How to Sell a Business, How to Buy a Business - David C. Barnett
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- Опубликовано: 20 сен 2024
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About ME: My name is David C. Barnett. I am a consultant and I work with entrepreneurs around the world to buy, sell, and organize their small to medium sized businesses. As a former business broker, I have seen many people do bad deals and lose their life savings as a result. So, I made it my mission to start this channel to help educate people on ways to invest smarter and to ask questions, so they don’t get trapped into doing bad deals.
I am also an author and written books such as Invest Local: A guide to superior investments returns in your own community. My most recent book is Smarter than a Startup: The Risk-Reduced way to get the business of your dreams up and running. Other titles include, How To Sell My Own Business and Franchise Warnings: What you really need to know before you buy. All titles are available here: www.investloca...
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The quality information in one video is awesome. This should be taught in every high school!,
I think I saw this first in high school. It was an elective called 'entrepreneurship' taught by a math teacher who ran a side hustle doing tacky happy birthday signs on people's front lawns. Like 'Lordy, Lordy, look who's 40' with 40 flamingoes standing all around.
Studying for a real estate exam, this video helped alot to understand asset vs share sale. Great teacher!
Glad it was helpful!
Excellent, thank you for taken the time to explain.
Glad it was helpful!
You're great David! A good teacher, keep making videos :)
Thanks Carly, don't forget to subscribe and if you go to www.DavidCBarnett.com you can sign up for my list.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
Very clear. Thanks!
Glad it was helpful Augusto. Be sure to like and subscribe!!
Your videos are very helpful. You do an amazing job explaining. Thank you!
Glad you like them!
Great video...you really did an amazing job at breaking down the differences and keeping it simple. Thank you!!!
No problem Jillian, thanks for the kind words. If you're going to be buying a business, please check out www.BusinessBuyerAdvantage.com and if you're looking at selling one, www.HowToSellMyOwnBusiness.com has all kinds of great information. Cheers.
Nice, simple, explanation. Your videos contain good solid information without the fluff that you see on other channels. I'm not sure why you're not getting more views and likes on the videos.
Thanks for the kind feedback Don.
Getting more views and likes simply comes down to viewers choosing to share and like the videos. The more likes a video gets, the more RUclips will recommend it to others making searches. (according to my understanding)
Views, subscribes and likes are up since I actually started asking people to do this. I believe that many users don't understand how important liking and sharing is.
Also, sharing videos to twitter and facebook is really important as it brings people in from other social networks.
Thanks for the feedback and please send in any questions you have about buying and selling businesses and local private investing.
cheers
dave
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
David! Great video and great explanation! I appreciated how well you broke things down and that you didn't add unnecessary fluff. Keep up the good work!
Chris Scott thanks for watching. Don't forget to submit any questions so I can add them to my list for upcoming videos.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
AND it's "Canadian" content! win.
Well, yes, I'm Canadian but the concept is pretty much identical all around the world.
Great video, thank you so much!
Glad it was helpful! Please remember to hit 'like' so RUclips knows its a good one. Cheers
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
Great video.
Simple explanation.
Good and readable.
Thanks Anderson!
I recently read your newsletter about how to evaluate IP and as someone who is sitting on allot of IP and wanting to create IP which isn't used it really opened my eyes on what I need to make it valuable to the business. Thanks for the insight.
Glad to have helped! Make the till ring!!
Best video I found as a beginner into this subject. It really helps to illustrate things when you give constant real world examples
I'm glad it was helpful Lewis.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
Good explanation, Thanks.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
THANK YOU SIR FOR YOUR VERY HELPFUL TUTORIALS
No problem Glen. Thanks for watching and please send in questions.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
Your video has really helped me. I am in the UK but there was lots of similarities with the UK.
Thanks Omar. Be sure to go do www.DavidCBarnett.com and sign up for the email list, you'll get the new video every Friday.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
So superb advice.
Glad it was helpful!
Love this video!!!!! You explain so well... will definitely watch more of your videos. Thank you :)
Thanks Chloe.
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
Hi David. Great content. I am Interested in finding out about the warranty indemnifying new owners from past owners' actions?
It can vary from deal to deal. It depends on what's been negotiated in the documentation of the deal.
So I have a questions for you - you mention at 5:00 that the in an asset sale “the customers may not know that someone else is mowing their lawn”. If, as you mention later in the video that when doing a share sale that you don’t have to renegotiate contracts with customers/partners, how does this affect an asset sale with informal customer relationships? If I make an asset purchase and include buying the old business name, am I required to tell every customer with an ongoing relationship that they are now doing business with a new corp? Thanks!
Depends on the type of business. If someone bought the local McDonalds franchise, do they tell each customer at the counter that they're doing business with a new corporation? It might be different if you issue invoices, you might want to notify people to make a cheque out to a different name or something. Just ask yourself, do the customers need to be informed or would they even care? Other people to ask would be your lawyer and your insurance agent. In some industries there could be important reasons to be sure you do. Cheers.
Great job! Quick question….A share purchase agreement seems easier to manage than an asset agreement. Could you do a share purchase agreement, however put in the contract that the seller is responsible for all liabilities? I assumed in any contract you could put in whatever each party agrees to? Thank you!!
Share deals can be easier under certain circumstances and, yes, you can put in whatever you want. But there is a difference between someone accepting responsibility and enforcing this. Lots of risks, especially in small businesses. There is a whole module on share purchases in my Business Buyer Advantage course. Learn more at www.BusinessBuyerAdvantage.com Cheers.
Since Australian businesses can buy 30k (currently 150k) assets with 100% instant depreciation, my question is: Is it legal to buy a 30k business asset (car, machine, etc.), and then sell it 1 year later to a private individual for well below the asset's value (i.e. only $1)? The advantage is that the business can claim the 30k asset as an instant tax deduction (so the business ends up paying less tax or even no tax at all), and the next year, the private individual can acquire something of a high value for almost free. Another potential benefit is that the business now has no assets, so in the odd chance it is sued, the asset is no longer at risk because it is privately owned. When I say "business", I mean "Pty Ltd company", definitely not sole trader/partnership of course. It seems smart and legal, but am I missing something? Also another question: Instead of selling 1 year later, what about 1 day later? Depreciation is instant and 100%, right? So can it be sold for $1 even the next day then? I know that selling a vehicle means the buyer needs to pay about 3% stamp duty, but that wouldn't apply to other assets like a machine, or carport, or solar panels, or a dam, etc, right?
So, you need to talk to an accountant in Australia about this question. But if your goal is to protect assets, then simply have two limited companies. One who is an operator and the other is a 'leasing company' The leasing company can acquire capital equipment and lease it to the operating company and enjoy the depreciation while the operating company has an expense which can be fully offset against earnings. I've seen this kind of setup in many countries.
The point about taxes at 8:45 might not be true (even for lower MM/retail biz broker scenarios): first, taxes are paid after debt in most countries. if you're saying you benefit from corporates taxes (eg, C corp in US) at lower rates than personal taxes, you have another layer of tax for distributions to get the money to accumulate your wealth anyway.
Everything else was super informative
LLCs in the USA are pass-through entities so they're a little bit different, revenues are taxed in the hands of the owner. Debt repayment is not an expense, only the interest is.
very interesting stuff David, thanks for your video I've something new about investing
Thanks for the comment David. If you want to learn more each week, you should visit www.DavidCBarnett.com and sign up for my weekly email list. You'd see all the new videos before they go public.
Hello David. I Love this very informative video. I have a thought/question. lets says, I register a company and issue/buy shares to myself owing 100% of the company. If I "WILL" these shares to my child they child will when I die, own the shares and ultimately the company and all the assets/liabilities of the company. That correct right? I "WILL NOT" CONSIDER YOUR ANSWER TO BE LEGAL/ACCOUNTING ADVISE. thanks very much for your help. Cheers!
Yes, your child will own the shares but the tax authorities that skulk and slither around your house will have an opinion as to what they're worth. So, generally speaking, there will be some sort of tax liability associated with inheriting the shares. This depends on where in the world you are. The entire 'tax planning' industry is built around helping people identify and mitigate this burden. So if this is your plan, then you need some local advice. Thanks for watching and be sure to subscribe!
hala oy ka gwapo...
interesting
No problem Ranjita, if you want to learn much, much more, take the online course on buying businesses at www.BusinessBuyerAdvantage.com
I would like to know how to break down the value of selling small restaurants
Is it for a specific deal or just in general?
God Bless you Mrs Lauren.You can contact her via Telegram @fxgainwithlauren or Whatsapp: +16627320128 for professional assistance on account management
What about buying a business through a statutory merger?
The terms for mergers vary from jurisdiction to jurisdiction. It's still a merger and requires lots of papers and lawyers to pull off.
My husband and his business partner formed a corporation that bought the assets of another company. New separate corporation. The new corp was named in a law suit and the judge ruled the new corp was responsible for what the other business did even though the new corp only bought the assets. How do you like them apples? Fortunately, it was found the other business wasn't responsible for the problem in the first place but if it had been, the new corp would have been on the hook for the damages. It's all in the hands of some judge's opinion. Should be the law plain and simple but we all know how that goes.
Yes, it depends on the type of claim and where you are. Employee claims, tax claims, and more can breach the ownership gap and follow the assets. It's why it's so important to have an attorney experienced in business transactions working with you so you know what the possible hazards are. Also why you always need a sizeable seller financing note subject to offsets.
Can you give corporations assets
You can. It's called an 'in-kind' contribution. For example, you could give a hammer to your corporation. The 'tools' asset would go up by $10 and the share capital would go up by $10 if you traded the hammer for shares. Get a CPA to help you though because there are rules around this type of stuff regarding how you value these assets that can vary by country.
Corporations can also give services or stuff to shareholders as a dividend. It's called a distribution or dividend in kind. Again, consult a CPA.
BiggerPockets Business podcast brought me here
Thanks Aaron. I had a lot of fun doing that show.
If I complete an Assets purchase can I continue to use their name or must I change it to my new corp.?
There is a difference between a registered business name and a trade style. These are transferred in different ways depending on your jurisdiction. Where I live, a name is moved over by a seller filling in a 'discontinuance of name' form and the buyer fills in a 'name registration' form with the same name and they mail them in together. Just call the government agency that takes care of business names where you live and ask how to do it. The name of the business, or trade style is an asset just like a piece of furniture.
There is no such thing as a limited liability corporation.
Limited Liability is one of the biggest features of having a corporation. There are actually also Unlimited Liability Corporations in some jurisdictions as well. They're useful when you want to be able to move losses up to a parent corp.
Nothing to out the public
Selling shares to the public is a whole different ball of wax. Lots of regulation you need to comply with.
Get to the point