***New Video Alert!
Want to buy a business but find yourself embarrassingly broke?
Here’s a 90-day plan to get yourself in shape to be a real business buyer one day.
Warning- work is involved.
Watch this week’s video here: https://youtu.be/7_JG6klOacA
Cheers
See you over on YouTube
David C Barnett
#businessbroker #bizbroker #businessbrokers #smallbusiness #mergersandacquisitions #smallbiz #buyabusiness #zerodown #nomoney #90dayplan #checklist
Dadpreneurs
New Livestream guest- Chris Buna
I’m happy to have Chris join me on a live broadcast.
Chris works with small businesses to help systematize them with automation tools.
He’s also a Dad.
Tune in and as we’ll be discussing Dadpreneurs and why Dads running businesses can benefit from having a peer group for business and parenting discussions.
This is a ‘must see event’ for Dads or those aspiring to be one.
Be sure to join live so that you can ask questions, replay will be available.
Set yourself a reminder on YouTube here: https://youtube.com/live/OJdUrTNBLdU
We’ll be going live Monday May 12, 2025 at 1 PM Atlantic Time and 12 Noon Eastern Time
See you there!
David C Barnett
If you're looking to buy or sell a small business, one critical decision you'll face is whether to structure the deal as an asset sale or a share sale. This choice has major implications for taxes, liability, financing, and legal complexity—especially for first-time buyers.
In this article, I’ll explain the difference between asset and share sales, why buyers and sellers prefer one over the other, and what risks and advantages each option presents. https://youtu.be/HgDLgwbXgj0
Before diving in, it’s important to recognize that most businesses are owned by corporations, not individuals directly. So while you may be negotiating with a person, the business itself likely exists as a separate legal entity.
For example:
Scott owns a lawn care company called Scott Corp Ltd.
David wants to buy the business.
In an asset sale, the buyer purchases selected assets of the business—such as equipment, trademarks, websites, customer lists, etc.—directly from the corporation.
Clean slate: You start fresh without taking on past liabilities.
Tax benefits: Assets can be depreciated from their new purchase value.
Flexibility: You pick and choose which assets and liabilities to assume.
David buys the lawnmower, trade name, and customer list from Scott Corp Ltd.
He forms a new company to operate the business. Scott still owns Scott Corp, but now it just holds the sale proceeds.
Scott may face a second layer of taxation when he pulls the sale proceeds out of Scott Corp (dividends or salary).
In a share sale, the buyer purchases the shares of the business entity itself—meaning they take ownership of the whole company, including all assets, contracts, and liabilities.
Cleaner exit: Seller walks away with fewer post-sale obligations.
Tax benefits (in some jurisdictions): In Canada, for example, share sales of eligible small businesses can be tax-free.
Liability exposure: You inherit all past obligations, lawsuits, and debts.
No asset depreciation reset: Assets remain on the books at their historical value.
David buys 100% of Scott’s shares in Scott Corp Ltd.
All contracts remain intact. The lawnmower and liabilities stay where they are. But now David owns the corporation, and thus any lawsuits stemming from past work also land on his desk.
Most small business acquisitions—especially under $500,000—are done as asset sales. Here's why:
They reduce legal and financial risk.
The buyer has more control over what they’re taking on.
It simplifies negotiations with lenders and insurers.
That said, share sales can be advantageous when:
The company holds licenses, permits, or long-term contracts that can’t be easily transferred.
There are bonding certificates or regulatory approvals tied to the business entity.
The seller is willing to accept a lower price in exchange for tax savings.
In these cases, buyers often ask for warranties and indemnities to protect themselves from pre-existing issues—backed by an escrow or legal mechanisms to enforce them.
Absolutely—especially if you're borrowing money.
Here’s why:
Corporations generally pay lower tax rates than individuals.
If you borrow personally, you’ll have to take after-tax dollars out of the business to make repayments—making it more expensive.
Buying through a corporation allows you to reinvest and repay debt more efficiently.
There’s no one-size-fits-all answer. The structure of your deal should be informed by:
Legal advice
Tax planning
Your financing strategy
Your long-term goals
Whether you're buying a business or selling one, make sure you work with a qualified attorney and a CPA who understands your local laws and industry.
Learn more in my Business Buyer Advantage course: businessbuyeradvantage.com
Don’t forget to join my email list at DavidCBarnettList.com and receive 7 FREE gifts.
***New Video Alert!
Everyone is getting rich with Boomer business sales in the Silver Tsunami.
Do you feel left out?
This week, I respond to a wave of broke business buyers who we’ve met and I’ll let you know why you’re facing frustration AND-
WHAT TO DO ABOUT IT.
Watch this week’s video here: https://youtu.be/C9immXZZOdw
Cheers
See you over on YouTube
David C Barnett
Tsunami of 'No Money' Buyers
New Livestream guest-> Markian Pergat
I’m happy to have Markian Pergat join me on a YouTube Premiere
Markian Pergat is an entrepreneur from the Ottawa, Ontario area.
Tune in and as we’ll be discussing Markian experience on how he got into running his own business and entrepreneurship.
This is a ‘must see event’ for people who are interested in running their own business too.
Be sure to join our YouTube Premiere so that you can ask questions, replay will be available.
Set yourself a reminder on YouTube here: https://youtu.be/NHggS-L9JcU
YouTube Premiere will be going live Monday May 05, 2025 at 1PM Atlantic Time and 12 Noon Eastern Time
See you there!
David C Barnett
Today’s question comes from a recent conversation I had with a business owner who had been preparing his business for sale. He told me that, on the advice of his accountant and other professionals, he had paid off all of his business debt to make it more appealing to potential buyers. While his intentions were good, it reflects a common misunderstanding about what really makes a business valuable and attractive to buyers. https://youtu.be/pOJ3B1_K9L8
Let’s get to the heart of the matter: a business’s value is primarily based on its cash flow and risk profile—not its debt balance.
Think of it like this: if you were selling your house, would potential buyers care about your mortgage? Not at all. Your home’s value is based on comparable sales, location, and condition—not whether you’ve paid it off. When you sell the house, you use the proceeds to pay off any remaining mortgage.
The same concept applies to businesses. Buyers are interested in what the business earns—its free cash flow—not what the current owner owes. A business that generates $100,000 in cash flow is worth what it’s worth, regardless of any debt obligations the seller may have.
Yes, you read that right.
When a business has existing debt—like capital leases or equipment loans—these can sometimes be assumed by the buyer. That means the buyer doesn’t have to raise as much cash upfront. For many buyers, the hardest part of a deal is pulling together the financing to make the purchase.
If the buyer can assume certain obligations as part of the purchase consideration, it lightens their immediate financial burden. This makes your business more attractive and potentially easier to sell.
Not necessarily.
While it’s important to have clean financials and a clear picture of your obligations, eliminating all debt might actually take away some of the flexibility a buyer would have in financing the deal.
Instead of rushing to pay off everything:
Organize and document your debts.
Understand which ones are assumable.
Discuss financing flexibility with your advisors.
And remember, I work with clients around the world—Canada, USA, UK, New Zealand, Australia—so if you’re looking for one-on-one advice, I’m just a call away.
If you’re thinking about selling your business, head over to howtosellmyownbusiness.com. You can.
Or grab my book: How to Sell my Own Business
Sign up for my email list at DavidCBarnettList.com to receive exclusive content and 7 FREE gifts.
Cheers, and see you next time!
David C. Barnett
***New Video Alert!
How do you negotiate the best price?
There is the price, terms, conditions, what’s included, working capital items, etc.
It can be a lot. Here’s my advice this week.
Watch this week’s video here: https://youtu.be/nA4iCVgw_gM
Cheers
See you over on YouTube
David C Barnett
