Buying a Business - Stock or Asset Purchase?

If you are buying a business, should you do an asset or stock purchase? As you are evaluating businesses for sale, I will help you decide what makes the most sense, what limits your risk and puts the most money in your pocket. I’ll go over the advantages and disadvantages of each and much more.
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[@LeoLandaverde]

Want expert acquisition advisory from a business broker? APPLY to The Business Acquisition Mastery Program: 2zrpopdjp36.typeform.com/to/g3HYINLo?typeform-source=businessacquisitionmastery.com Click on the link below to download my CASH FLOW CALCULATOR for BUSINESS PURCHASE worksheet: leo97eda0.clickfunnels.com/optin1657836675771

[@SportsmansDesigns]

Very informative, thank you for putting this together

[@LeoLandaverde]

Jeremy, glad you think so! Thanks for watching my video. Are you looking for a business to buy?

[@YusufMatcheswala]

Hi Leo, this is such a great video for me because I am going through the offer process right now on a small business purchase (

[@LeoLandaverde]

Hi Yusuf, thank you and I’m glad you found my video useful. Actually, I’m in the middle of a transaction right now representing the buyer where the seller only wants to do a stock sale for the same reasons, tax savings. A lot of it has to do from misunderstandings from the CPA who may or may not have had involvement in M&A transactions. I can’t speak to your tax consequences as I recommend you talk to your own tax accountant for that. However, when you do a stock sale, you don’t get the benefit of depreciation as when you purchase the assets. If you are going to do a stock sale, you need to be really sure that you pay a close look to accounts receivable and accounts payable and figure out what the working capital is for the business and make sure you have ample capital for the for 60 to 90 days post close. Yes, I can do more videos like that in the future. Are you working with the Business Broker right now representing you?

[@YusufMatcheswala]

@@LeoLandaverde I already have an executed LOI and DD is underway. I wish I would have found your videos earlier so I could have worked with you going into the process as I think your expertise would have helped me tremendously. Can I IM you my contact so I can reach out to you on this topic?

[@LeoLandaverde]

Yes, please email your contact information to [e-mail].

[@alekboyy]

Great video Leo ! I am currently looking into getting out of the rat race and am considering an asset purchase. I have never been the head of a business and understand that it will be a learning curve that will take time and dedication. Is an asset purchase the best way to start my new journey? Thank you.

[@LeoLandaverde]

Alex, absolutely. Asset purchase is the best with the least amount of risk. What type of businesses are you looking for? What price range?

[@alekboyy]

@@LeoLandaverde a brewery and about 100k

[@gibbylee87]

Is it typical, in an asset sale, that the seller is also including SDE valuation multiple on top of Asset value? Also, in asset sale, should working capital be included?

[@LeoLandaverde]

a valuation based on SDE is different than an Asset Valuation. They are never combined for our purposes. That would be like double-dipping. Whenever working with buyers I always like to have working capital be given by the seller. All of that can be negotiated.

[@juliakow222]

Hi, I’m thinking about buying a bar and online the bars that are asset sales are much cheaper. Why is that? Does it mean the bar isn’t making money?

[@LeoLandaverde]

The assets are cheaper online are supposed to what? All businesses are valued on multiples of cash flow so the higher the cash flow, the higher the valuation. What city and state are you in?

[@BrooklynGMT]

I have this exact situation. Can I call you?

[@LeoLandaverde]

Please send me your contact information to [e-mail] and let's connect.