It’s common for many people to equate selling a company to selling a house. After all, many of us have been through the home buying process at one point or another. But buying an ambulance business for sale is a bit more complicated.
Asset Purchase Agreements
When a home is sold, the seller transfers a physical piece of property to the buyer. When a business is sold, the seller is actually transferring a complex collection of assets that make up the business. These assets may involve property, of course, but usually also include inventory, branding, contracts, and accounts receivable. Since no two companies are exactly the same, every asset purchase arrangement is managed a little differently.
One of the benefits of an asset purchase agreement over a stock purchase agreement is that the seller and buyer have some degree of flexibility when it comes to divvying up assets. Certain liabilities and assets – such as accounts receivable – may be left up to the discretion of each party.
Handling Accounts During a Sale
As any experienced business owner knows, longstanding clients are not always billed immediately for use of a non emergency transportation business. Rather, most services are arranged on credit. A medical transportation service typically sends out periodic invoices to collect for services rendered under contract. While technically debts, these payments are counted as cash flow on the company balance sheet.
When you decide to put your ambulance business for sale, you can choose whether to include accounts receivable in your asset purchase agreement. (In fact, many business owners with no intention to sell opt to hand off accounts receivable to a collection company in order to raise funds, a strategy known as debt factoring.) When it comes to putting your ambulance company for sale, holding on to your debts can provide a tax advantage. As anyone who has ever sold a business knows, you don’t get to keep all the money you walk away with; Uncle Sam takes a hefty bite. If you choose to sell your accounts receivable along with your business, the amount of the accounts is taxed as your income during the year of the sale – even if clients haven’t paid. By holding onto your accounts, you will still need to pay taxes as the money is collected from clients, but it won’t be in one unmanageable lump sum.
Structuring the Sale
To make a long story short, it’s a smart idea to be adaptable when laying out your purchase agreement. A transportation business broker can help you structure a sale that works to the advantage of both parties. The right degree of flexibility can make an ambulance business sale more profitable for you and allow you to make changes that sweeten the deal for your buyer.