Most MSP owners spend years building their business but only a few hours thinking about how to sell it. That’s a problem — because the structure of your sale, not just the price, determines how much of that check you actually keep.

In my latest M&A Insights conversation with Dave Wanis, Tax Principal at Weaver, we unpacked how deal structure can quietly swing your after-tax outcome by seven figures.

• Asset Sales: Painful for Sellers, Profitable for Buyers

From a seller’s perspective, asset sales usually mean higher taxes. They can trigger both corporate and individual-level taxation and reclassify part of your gain as ordinary income — taxed up to 37%. But for buyers, asset deals come with a major advantage: a stepped-up basis that allows them to depreciate or amortize the assets they just purchased.
Smart sellers know this — and negotiate to capture part of that buyer benefit in the purchase price.

• The Hidden $1 Million in Goodwill

Under current rules, the buyer can amortize goodwill from an asset purchase over 15 years. For a $10 million MSP, that goodwill deduction can be worth close to $1 million in present value — but only if it’s an asset sale. Pro tip: ensure your MSAs and client contracts are assignable before you go to market. Otherwise, that goodwill advantage could vanish during due diligence.

• Stock vs. Asset vs. F-Reorg: Finding the Middle Ground

Here’s the tradeoff:

• Stock sales yield lower taxes for sellers.
• Asset sales yield higher deductions (and thus higher value) for buyers.
• F-Reorganizations can give you both — a clean legal stock sale that’s treated like an asset sale for tax purposes.

Dave calls these “have-your-cake-and-eat-it” structures, but they need early planning and the right tax counsel to execute.

• Cash Isn’t Always King

It’s tempting to take all-cash at close. But remember: cash is immediately taxable, while rollover equity lets you defer taxes and participate in future upside.
In a high-rate environment, that deferral can be extremely valuable — especially if you believe the acquirer’s equity will appreciate over time.

• The Takeaway

Don’t wait until you have an LOI to think about tax structure.
As Dave put it, “Once you know you’re going to sell, start the conversation — even if the sale is five years away.”

Because in M&A, the difference between a good deal and a great one often comes down to how it’s structured, not just how it’s priced.

Hosted by Madhur Duggar, Senior M&A Advisor at Excendio Advisors, specializing in MSP M&A, valuations, and exit preparation.

Reach out to Madhur by email or 212.731.4230  

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