Integrated Freight Corp (fka IFCR)

[eddy2]

How it's done. By Sly

A buyer and seller come together on a deal to sell and buy a company. If a existing company is buying another the original share holders will often take a stake in the new entity. New stake holders are often brought in and sold shares in the new old entity up for sale.


The company can be sold with one of two considerations based on a dry or wet lease. A dry lease it's sold on the new owners being responsible for all up keep. On a wet lease the up keep will ride on the original owners responsibility.

This will often depend on the age of the facility and equipment along with valuations given to the equipment.


So one arrangement is priced on gross revenue the other is based on net revenue. This is important to understand when reading your income statement as to who is responsible for the equipment.


So the company for our purpose is sold on the merits of its gross revenue times ten. In this situation the assets play an important part of the outcome of who is entitled to the depreciation proceeds from the differed tax's paid and held in trust by your government " federal and jurisdiction governments".


So what is the price the company was sold for to the new owners and what happened to the money raised.


The capital raised for the purchase is based on projected earnings times ten for the period of ten years. Tax's are pre paid on those ten years by a bank loan. The rest of the capital is raised by selling equity to the existing share holders of the buying entity as well the public depending how much leverage is needed.

This money is put into a trust for both the buyer and the seller. This trust money becomes a debt to both parties involved in the buying and selling of the business. If the business does better then projected in that ten year period money will go to the seller. If the business does worst then projected money will go to the buyer after the ten years.

The depreciation costs will come out of prepaid tax's paid when the business was purchased. Adjustments will come from the trust set up between the buyer and seller.


So who owns the common interest and who ownes the treasury stock interest of the trust that was set up?

We know who ownes the outstanding shares owed that is the asset of the set up trust in question.

The answer is associated with your capital surplus and retained earnings. Keep in mind as well that a company can be sold internally as well to knew out side interest. In this case the name is kept the same and is often a wet lease put in place by the companies article of corporation other wise if it's an outside source it would follow the governing rules set in place by international trade committies if traded on the world markets or will be set by federal or jurisdiction rules " state rules".


There is a tipping point to the question of who is the common share holder and who is
Is represented by the treasury stock. There is three parties involved in the trust, one the bank who put up the tax's plus your buyer and seller of the interest in question. The wet and dry lease is really impartial cause all three parties govern the vote of the trust release of funds. They all have equal say as all parties will have the same amount of directors involved in the trusts funds.

They all have set financial goals set in place within the trust.

So what happens when the goals of the trust is so far out of wack beyond the agreed price. Well there is a mutual insurance program set up by a third party willing to take that risk "performance bond". The bond cost like the tax's is incorporated in the goodwill for both seller and buyer.

Have fun figuring out who is the common stock and who is the treasury stock, Happy trading. Sly