The tax answer begins with deal structure
Entity type, asset allocation, and consideration can change net proceeds.
Business-sale taxes can look overwhelming because several questions are discussed at once. The framework becomes more manageable when the questions are separated.
First, what is being sold: ownership interests in the company or selected assets? Sellers often prefer an equity sale because it can be simpler and may produce more favorable tax treatment. Buyers often prefer an asset sale because they can choose assets and liabilities and establish a new tax basis. The actual result depends on the entity and the transaction.
Second, how is the purchase price allocated? In an asset sale, value may be assigned to working capital, equipment, contracts, restrictive covenants, goodwill, and other categories. Those categories can produce different tax consequences for buyer and seller, so allocation is a real economic term.
Third, when is consideration received? Cash at closing, seller notes, earnouts, and rollover equity may be taxed differently and at different times. Deferral can be valuable, but it also introduces credit, performance, and liquidity risk.
Fourth, which state and local rules apply? Residence, company location, transaction structure, and post-closing arrangements can matter.
The practical lesson is to model after-tax proceeds before negotiating the letter of intent. A higher headline price can produce a lower net result if the structure, allocation, or contingent terms are unfavorable.
The framework is understandable; the final calculation is fact-specific. Engage an experienced transaction tax adviser and M&A counsel early enough to influence structure, not merely report the result after it has been negotiated.