assetsale

An asset sale is a transaction in which a buyer purchases specific assets and liabilities of a business rather than acquiring the company’s stock. Asset sales are common in mergers and acquisitions when the buyer or seller wants to transfer only a portion of the business, non-core assets, or a division. Assets typically included are tangible assets (equipment, inventory, real estate, vehicles) and intangible assets (intellectual property, licenses, customer lists, goodwill). Liabilities do not automatically transfer; the buyer generally assumes only those liabilities that are explicitly agreed in the purchase agreement.

The deal is governed by an asset purchase agreement that specifies included and excluded assets, any liabilities the buyer will assume, representations and warranties, and post-closing protections such as indemnities. Parties must obtain any necessary consents to assign contracts, leases, and permits, and regulatory approvals may apply. The purchase price is allocated among assets for tax purposes, affecting depreciation, amortization, and post-closing tax consequences for both sides.

Asset sales are driven by motives such as corporate restructuring, monetizing non-core assets, raising capital, or distress divestitures in bankruptcy. They can enable a cleaner transfer of risk and faster closing but may complicate the transfer of licenses or key contracts.

Tax and liability aspects vary by jurisdiction. For buyers, asset purchases can offer a basis step-up for assets; for sellers, taxation depends on asset types and local law. Indemnities, escrow, and specific carve-outs help manage post-closing risks, including environmental or title liabilities.

Asset sales are useful for isolating risks and avoiding unwanted liabilities, but they often involve complex negotiations over contracts, employee transfers, and tax allocations, and may incur higher transaction costs.