The first time you sell a company, the buyer files a form about your taxes.

CHICAGO. Take a founder, and call her Nora Ampersand. She started a machine shop in Elk Grove Village in 2009, grew it to ninety full-time people, and sold it this spring to a sponsor-backed buyer out of Indianapolis, having never sold anything larger than a used forklift.

Her banker's closing checklist ran to 140 lines. It was a good checklist, the same list a seller in Ohio would get, and nearly everything on it happened as described. The lines that changed her year took four words each.

The first read "bulk sales notice (buyer)." Then the buyer's lawyers filed a form with the Illinois Department of Revenue about her. Form CBS-1 reports a sale of the major part of a business's assets, and the statute makes the purchaser file it no later than 10 business days before the sale. The seller may file. The buyer must, and a buyer who fails is personally liable for the seller's unpaid Illinois taxes up to the value of what it bought. The Department's instructions add that a bulk sales release comes "only after all taxes, penalties, and interest have been paid."

The state ran her tax history on the buyer's filing. Once a sale is reported, the Department has 10 business days to order the buyer to hold back part of the price, and the ceiling on that order is a formula that multiplies: a minimum amount set by type of business, plus twice the outstanding unpaid liabilities and twice the average liability of preceding filings times the number of unfiled returns. Nora's controller found the problem in an afternoon. In one slow quarter of 2021 the shop made no taxable retail sales, so nobody filed the return showing zero. One unfiled return. Under the statute's ceiling it counted, and it counted twice.

A second clock started with the first order. Within 60 business days after that first order, the Department has to state the actual amount due, and until a certificate arrives saying nothing is owed, the buyer keeps withholding. Sixty business days is twelve weeks. The statute does release the buyer if the Department misses either deadline, which comforts buyers. Nora's deal closed in April. The piece of her price that answered for a zero return from 2021 came back in July.

The unemployment insurance system runs the same play. An employer that sells substantially all of its business must, within 10 days after the sale, file its reports and pay what it owes on wages through the sale date, and the buyer must hold back enough of the price to cover the seller's contributions until the seller produces the Director of Employment Security's receipt or certificate. One agency wants notice ten business days before closing, the other its reports ten days after. Nothing in either statute mentions the other.

She did not know she needed a vote. Her company was an LLC with four members. She held 72 percent, and the first machinist she ever hired held 8, given in 2014 because it seemed right. The Illinois LLC Act lists the matters that require the consent of all of the members, and the tenth is "the sale, lease, exchange, or other disposal of all, or substantially all, of the company's property with or without goodwill." An operating agreement can change that rule; the Act lets one modify its provisions governing relations among the members. Hers was a 2009 form that never had. The machinist held a veto over the sale of a company he had spent seventeen years inside, and nobody knew it until the consents came around.

He signed, because he is decent and because the buyer was keeping him on, and Nora noticed, on LaSalle Street while the consents went around the table, how much of her life had rested on another person's decency. A corporation gets a different instrument. The Business Corporation Act lets a sale of substantially all of a corporation's assets proceed on two-thirds of the outstanding shares. A shareholder who objects gets no veto. He gets the right to dissent and take "fair value," his proportionate interest "without discount for minority status or, absent extraordinary circumstance, lack of marketability." One statute gives the minority a price. The other gives him the keys.

One statute gives the minority a price. The other gives him the keys.

The ninety people were another line on the list. The Illinois WARN Act starts at 75 employees, so she was inside it. The buyer meant to close the Addison building, thirty-one people, and move the work to the main plant without them. Had it offered them jobs there, a short commute away, the Act would not have counted the losses at all. It made no offer. Thirty-one losses at one site within 30 days is a mass layoff, at least a third of the site and at least 25 people, which requires 60 days' written notice to the employees, to the Department of Commerce and Economic Opportunity, and to the chief elected official of every affected municipality and county. When all or part of a business is sold, the seller is responsible for notice up to and including the effective date and the purchaser after it, and any full-time employee of the seller on that date "shall be considered an employee of the purchaser immediately after the effective date of the sale." The morning after the effective date they were the buyer's, and so was the duty to tell them.

A form she had never heard of arrived after the price was fixed. In an asset sale, both sides must file Form 8594 with their tax returns, allocating the price across seven classes of assets. Class V is where the machines live. Class VII is goodwill. Each side wanted more of the price in a different class, and because the letter of intent said nothing about allocation, the argument came in the last two weeks with the price already shaken on. Section 1060 says a written allocation binds both sides unless the IRS finds it inappropriate, which makes the fight cheap at the letter of intent and expensive after. Had she been an S corporation selling stock, the buyer might have asked for a section 338(h)(10) election, which treats the company as having sold all of its assets, needs every S corporation shareholder's signature, including those who sold nothing, by the 15th day of the 9th month after the acquisition date, and once made is irrevocable.

The money waited longest. Her price was $18 million, and the purchase agreement put 10 percent of it, $1.8 million, with an escrow agent for twelve months against the chance that something she had said about the company was wrong. She had taken this as an insult. The study says it was the median. SRS Acquiom's 2025 study of 2,200-plus private-target deals closed from 2019 through 2024 found that 89 percent of 2024 deals had at least one escrow or holdback, that the general indemnification escrow, where there was one, had a median of 10.0 percent of transaction value where no insurance was identified, and that the median survival period for the seller's representations was 12 months. Where the buyer had bought representations and warranties insurance, it was 0.35 percent. On her price that is the difference between $1.8 million and $63,000. Insurance was identified on about 42 percent of 2024 deals, and a third of 2024 deals had no survival at all. The 2026 edition reports escrow amounts growing on insured deals and steady on uninsured ones. The market prices a stranger's honesty at ten cents on the dollar for a year, unless an insurer vouches for her, in which case it is a third of a cent.

If she had it to do over, she would ask the Department of Revenue about her own account the month she signed the letter of intent, which the statute lets a seller do, and file every zero return before anyone else went looking. The vote clause of her operating agreement would get read before the first call with a banker, and the machinist would hear it from her before he heard it from a form. She would count heads against 75 and write the notice calendar into the purchase agreement. The allocation would go in the letter of intent, where it costs an afternoon. And she would ask about insurance before she talked about price, because a nearly thirtyfold difference in what gets held back is a difference in price.

Elk Grove Village makes things, and it makes founders who have never sold anything, and most of them get one try. Every one of these statutes protects somebody reasonable, the state's revenue or the buyer's balance sheet or the employees' sixty days. Every clock in the deal ran against the person who had never done this before.

Columns are the views of their authors. They are not legal advice and not the position of the firm.