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- 🟠S Corps, Asset vs Stock deals, and LOIs
🟠S Corps, Asset vs Stock deals, and LOIs
Legal & structuring considerations when buying or selling your next company
The SMB Scoop will get a little legal today. Try to stay awake...some basic knowledge on this front can save you tens of thousands of dollars in legal fees when you buy or sell your next business.
1. Most small business owners who elect S corp status don't *really* understand what they're doing (most rely on their accountant's recommendation). Here's why they are very popular with small business owners (hint: $$$):
You've heard of them, you may even have one, but do you really understand what an S Corp is?
In this thread I break down exactly what "S Corp" means and why they're popular in SMB.
In a future thread I'll address their drawbacks in M&A.
For now, grab a mimosa and let's dig in! http
— Kevin Henderson (@KHendersonCo)
2:43 PM • Mar 26, 2023
2. When you buy a company, you can either do a stock deal or an asset deal. Most small business transactions under $10,000,000 purchase price are asset deals - here's why you typically want to do an asset deal if you're a buyer:
When acquiring a company, you either buy the STOCK or buy the ASSETS (stock deal or asset deal).
Why does it matter?
💲💲Cash flow 💲💲
This 🧵is summary of what I've learned doing #smallbusienss stock/asset deals. Ignoring this topic can be...painful (beware).
— Ben Tiggelaar 🟠(@bentigg)
3:17 PM • Nov 29, 2022
3. Twelve basics of a Letter of Intent (sometimes called an LOI). This is the initial non-binding offer to buy a business.
Letters of Intent, or LOIs, are used by 99% of business buyers to make an offer on a business.
But most people don’t know how to write a good one.
As an M&A lawyer, I’ve written or reviewed dozens upon dozens of LOIs.
Here are 12 LOI basics you should know.
A 👇🧵
— Eric Hsu (@lawyer4SMBs)
1:37 PM • Mar 2, 2023
Investors: Want to invest passively as an LP in cash flowing SMB deals? Accredited investors can apply for the Cash Flow SMB Investor List here.
SMB Acquirers: Have a deal under LOI and looking to raise capital? Reply to this email - send me info on your opportunity and I'll let you know if it is fit for distribution to the 350+ accredited investors on the Cash Flow SMB Investor List.
My current need: connecting with anyone who has operated or directly invested in: telecom, systems integrators, VARs, and managed service providers generally. Send me a reply to connect directly or if you have any connections in the space.
Ben Tiggelaar