At Ask Me Help Desk you can ask questions in any topic and have them
answered for free by our experts. To ask questions or participate in
answering them you must register for a free account. By registering you
will be able to:
Get free answers from experts in any of our 300+
topics.
When selling a business buy selling 50% of the stock how do you handle assets, accts rec and accts pay....Are they normally brought up to date of the sale or are they just assumed?
I don't understand what you are trying to do here. If you're selling 50% of stock, you're not selling the business. Do you personally own the stock and are selling it, or are you saying the company itself is redeeming the stock? I don't understand how this translates into "selling the business."
I and another indiviudal are the sole two stockholders. We are selling 50% of the stock (ownership) to another corporation. Question is--nothing has been mentioned about accts recevables and accounts payables in place. Does everything remain the same or is it normal to write in the offer how they are to be handled.
buckbeater, excuse me, but I know darn well what stock is and I worked in business for over 20 years. Stock is not "the business" -- it's a share of the ownership. The stock by itself is not even the net worth of the business! (Unless there's no retained earnings.) Selling shares is simply selling a share of the ownership. In a corporation, ownership merely transfers.
The question was not clear as to what the situation actually was. There simply wasn't enough information to dissern what was actually going on here.
Perhaps we use terminology differently, but that's certainly not a reason to make a blanket statement that I "know nothing about business." I love how when someone disagrees with one little statement, suddenly the person knows "nothing" about that subject at all.
EDIT: I just saw your question about how companies get their profits. And then tell me I know nothing about business. That is just too precious.
AMPCOY, if this is as simple as what you are presenting here, I don't see where any other accounts should have anything to do with it. If you are literally just selling a portion of your shares, that's a personal transaction between you and the buyers. They are buying a piece of ownership and the company itself is a separate entity. The owners in a corporation don't really "own" the assets or have the liabilities. The company itself does. The owners have a "net worth" in the company. If you're selling 50% of the shares, then obviously one or both of you still owns the other 50%. (Which is why I don't see this as "selling the business.")
There are other things that could conceivably happen. I was in one situation once, with a two-owner S corporation, where they literally wanted to sell the business. i.e. whole business, kit n kaboodle. They did not sell their shares and transfer ownership that way. They did a net asset sell. Kind of a technicality but it does work differently.
I'm thinking it might be prudent for you to get with this other company and make sure you have these technicalities straight. Are they seeing this transaction the same way you are?
The selling price of your stock depends on not only the net worth of the company, but also the information not reflected on the Balance Sheet, such as the economic outlook, the life cycle of the products, and etc. As a result, the price is most likely differed from the amount in your Shareholders' Equity. In addition, price will be negotiated between buyer and seller, based on their own prospectives. In another word, how much the business is worth is based on the present value of future cash flows.
Balance Sheet provides only one piece of all the information needed for the worth of the business, items on the B/S does not need to be adjusted.
Linear Mode
