Legal Definitions - bootstrap sale

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.