Which is better for my dealership sale?
Selling your automotive dealership is a complex transaction, so it helps to have a solid understanding of every step in the process.
One of the first and most crucial steps is deciding how to structure your transaction. To make that decision, you’ll have to choose between two main types of business sales — an asset sale or a stock sale.
The structure you choose will help determine several aspects of your sale, including tax implications, the types of buyers you attract, the profit model of the dealership’s new owner, and of course, negotiations.
So what’s the difference between an asset sale and a stock sale, and which should I pursue in my dealership sale?
Before we answer that question, first note: if the dealership for sale is structured as a limited liability company (LLC), a sole proprietorship, or a partnership, then the transaction can’t be a stock sale because the legal business entity does not contain stocks. So your decision is made — you’ll be making an asset sale — and you can move on to your next step, a business valuation (see below).
If your business is a C-corporation or a sub-S corporation, then you have options. You can structure the transaction as either an asset sale or a stock sale.