Slump Sale: An Overview

Slump Sale: An Overview

A slump sale is a business transaction often used in mergers and acquisitions, where an entire business unit or division is sold as a going concern for a lump sum consideration without assigning values to individual assets and liabilities. This method simplifies the sale process by focusing on the overall value of the undertaking rather than detailed valuations of each component. Despite its efficiency and operational continuity benefits, slump sales come with specific tax implications and potential regulatory hurdles, requiring compliance with various laws. While attractive to buyers due to the acquisition of a ready-to-operate business, slump sales can lead to disputes over true value and unexpected tax liabilities if not carefully planned. Therefore, thorough due diligence and expert advice are crucial for both buyers and sellers to successfully navigate a slump sale transaction.