Mergers & Acquisitions

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Home Podcast The Legal Aspects of Selling a Closely Held Company

The Legal Aspects of Selling a Closely Held Company

The Legal Aspects of Selling a Closely Held Company

Roger Royse

M&A Attorney | Tax Specialist | Author

Roger Royse, M&A attorney and tax specialist, discusses the sensitive issue of taxes and the implications of selling a closely held company with few shareholders. He presents a definition of a closely held company and discusses differences this sort of company presents in an M&A transaction, some issues around employees, and the “phantom plan.” He also addresses the importance of considering taxes when forming a company and looking ahead to the tax implications when it comes time to exit the company.

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Guest Profile

Roger Royse is a partner with Haynes and Boone, LLP, and practices in the areas of corporate and securities law, domestic and international tax, mergers and acquisitions, and fund formation. He works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger is a Fellow of the American College of Tax Counsel and former chair of several committees of the American Bar Association sections of Business Law and Taxation. Roger is also the author of Dead on Arrival: How to Avoid the Legal Mistakes That Could Kill Your Startup and 10,000 Startups: Legal Strategies for Startup Success.

Topics Covered

  • What are the most common issues when representing the sale of closely held companies? [1:18]
  • Tax aspects of selling a closely held company. [5:24]
  • What are the implications of terminating and rehiring employees on the day of closing? [12:00]
  • The concept of the “golden parachute” in the Internal Revenue Code. [16:02]
  • What commonly used tools help ensure the buyer retains employees? [18:34] 
  • What tools are used to retain employees for closely held companies that are not venture capital-backed? [24:15]
  • What is the “phantom plan”? [27:50]
  • Issues around self-employment tax for an S Corp and LLC. [29:49]
  • What type of attorney or advisor is recommended to handle the sale of a company? [34:14]
  • What exactly does it mean to allocate the purchase price? [36:53]
  • What is the tax treatment for section 197 intangibles of the IRS Code to the seller in an asset sale? [40:30] 

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Resources Mentioned

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