Typically, cash is not transferred during a business sale. In an asset sale, the owner keeps
his/her corporate entity, and all bank accounts, plus cash. Even in a share sale (when the buyer
takes over the legal entity), the cash balance is typically stripped down to a nominal amount.
This is done for a number of reasons:
– The buyer doesn’t want to pay extra for cash
– The vendor may not want to pay a commission on cash
– There are often tax consequences when taking cash out of a company, and a buyer
doesn’t want to inherit that liability
There are, however, situations where cash has to be left in the company:
– Where clients have paid deposits that remain as liabilities of the company
– Where there is a working capital deficit without the cash
Need more information? Call us at 204-478-7266, ext. 110. or click
https://www.bealbusinessbrokers.ca/buying-a-business/ to download our free e-book on
buying a business.