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Simple English definitions for legal terms
bootstrap sale
Read a random definition: LLP
A quick definition of bootstrap sale:
A bootstrap sale is when someone buys something using the money they make from selling that same thing. For example, if someone buys a business using the profits from that business, it's called a bootstrap sale. It can also refer to when a seller sells something to save money on taxes.A more thorough explanation:
A bootstrap sale is a type of sale where the purchase price is financed by the earnings and profits of the thing sold. This can refer to a leveraged buyout or a seller's tax-saving conversion of a business's ordinary income into a capital gain from the sale of corporate stock.
For example, if a company wants to buy another company but doesn't have enough money, it can use the profits from the company it wants to buy to finance the purchase. This is a bootstrap sale.
Another example is when a seller wants to convert their business's ordinary income into a capital gain to save on taxes. They can do this by selling corporate stock instead of selling the business's assets. This is also a bootstrap sale.