Should max take buyalls offer or insist on what he wants


Max is the sole shareholder of Smart Corporation. He started the internet company five years ago and has been working hard to turn a profit. Predicting that Smart will to be very profitable next year, Max had Smart borrow $250,000 to pay him the salary he rightly deserves. At the end of the current year, Smart has total assets of $400,000 and liabilities of $350,000. Max's basis in his stock is $200,000. Next year, Smart does become profitable and Max is approached by Buyall Corporation, a competitor, to sell Smart. Rather than a sale, Max suggests a merger in which he receives stock in Buyall in the amount of $700,000 plus $50,000 cash for all the assets and liabilities associated with the assets ($150,000). Buyall counters with an offer of $650,000 in Buyall stock for all of the assets and the $250,000 salary liability. Should Max take Buyall's offer or insist on what he wants?

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Finance Basics: Should max take buyalls offer or insist on what he wants
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