RSM424H1 Lecture Notes - Lecture 18: Cash Flow
Document Summary
Business acquisitions and divestitures assets versus shares. Price paid for a business is influenced by tax considerations. Real proceeds = selling price tax cost. Vendor may accept a lesser purchase price if vendor can reduce or defer the after-tax costs. If after-tax value is the same or greater than expected. A purchaser that can reduce the tax payable on the income stream acquired may be prepared to pay a higher price: assets versus shares. Assets versus shares: two possible ways to transfer for sale"s business to buyer corporation: Shareholder x sells the shares of for sale to buyer corporation: for sale corporation continues on with the same assets and related liabilities. For sale corporation could sell individual business assets to buyer corporation: for sale receives proceeds of sale; shareholder x continues to own for, tax implications of these alternatives has a significant effect on the purchaser and the. Sale of assets: when a corporation sells assets:
