Exiting a C-Corp vs LLC?

September 17, 2025

by a searcher from University of Texas at Austin in Austin, TX, USA

Hello - I am reviewing corporate structuring options and am evaluating QSBS (C-Corp) route vs LLC. In particular, I am trying to quantify the exit valuation impact of selling a C-Corp vs an LLC. Can anyone provide feedback on a conservative, realistic metric that I can use to plug into my complete formula? Let's say the estimated assets at exit are around $5,000,000 **This is a crowdsourcing attempt for various experiences in addition to those provided by my legal and accounting teams. Not seeking advice.

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Reply by an intermediary
from The Johns Hopkins University in Gainesville, FL, USA

This can be modeled, but it must be modeled on multiple fronts! When a Buyer makes a stock versus asset purchase, the "value" of tax writeoffs from depreciation and amortization is lost. I calculate the loss in NPV to the buyer based upon his/her personal tax and discount rates, and recommend a decreased purchase price based on that loss. On your end, QSBS has tax benefits that may or may not exceed the NPV loss. Your tax benefits may exceed the reduction in sales price as you get closer to the QSBS maximums. However, the amount of time you expect to run the business before exit also plays a role, as do corporate tax rates. If you'd like a financial model that helps you understand this better, feel free to reach out.

Reply by a searcher
from University of Florida in Washington, DC, USA

While QSBS grants seller an attractive exclusion of capital gains, the requisite structuring of the transaction as a stock sale may see a valuation discount given risk of unknown liabilities buyer must take on as well as missed opportunity for stepped up basis and the resulting depreciation/amortization value to the buyer. You can definitely model the impact of stepped up basis to a potential buyer from a DCF perspective, but the risk of unknown liabilities may not be readily quantifiable.

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