What is a Structured Sale and Selling a Business
In its most basic form, a Structured Business Sale allows the Seller of a business to enjoy the benefits of the cash they receive on the Sale of their business in California. That is, there are tax benefits to deferring the receipt of income for a specified period. The Seller, in conjunction with their professional tax advisor, determines this time.
It is typically an exciting time for a business owner in California to close the Sale of their business to a buyer and enjoy the rewards from their many years of hard work. Equally, it’s not exciting for the Seller to see how much tax they have to pay. A Structured Business Sale is the solution for a business seller in California. If they also own real estate and are selling it, a Structured Sale of a California-based business can be used to lower the amount of tax the Seller has to pay.
In many ways, the Structured Sale of a business in California works similarly to a 1031 exchange. In a 1031 Exchange, the funds are not immediately taxable because an intermediary, such as a bank or other financial institution, receives them. The funds are then held by
Midwest Trust invested in Treasury Bonds. The Seller receives payments according to the predetermined outcome agreed upon by the Seller and their tax advisor.
How do you execute a Structured Sale when you are selling a business?
At a simple level, all it requires is an addendum to the current Purchase Agreement. We work with the Seller and buyer (with no change in the purchase price), and the buyer still receives legal title upon the close of escrow.
If selling your business were easy in California, everyone could do it. The fact that selling a business in California is different than any other state.
Are there any costs?
There are no out-of-pocket costs or upfront fees to either the Seller or buyer when constructing the Structured Sale.
A structured sale is best suited for transactions where the Sale of the business exceeds $500,000 and all proceeds are going to the Seller.
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700. If you prefer, email him at support@rogersonbusinessservices.com. Andrew serves the whole state of California.
More information?
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