M&A Tax Showdown: Why the Buyer and Seller ALWAYS Disagre
The Age old dichotomy
Patrick Howard
9/26/20251 min read
t's the age-old M&A dichotomy:
🤝 The Buyer's Dream: An Asset Sale. Why? They get a "step-up" in basis, leading to higher depreciation/amortization and major future tax savings.
đź’¸ The Seller's Dream: A Stock Sale. Why? They typically pay less in tax by qualifying for lower Capital Gains rates.
This fundamental conflict is the first (and often toughest) negotiation in a deal. A smart advisor knows the value of that "tax benefit" to the buyer and can use it to negotiate a higher purchase price for the seller—essentially selling the buyer's tax savings back to them!
This is where the true value of M&A tax expertise shines. Understanding mechanisms like the IRC Section 338(h)(10) election—which can offer a hybrid structure—isn't just a technical detail, it's a multi-million-dollar swing factor in the final outcome.
Don't leave that value on the table. Bring in the experts early.