Whether you’re selling an online business or a brick-and-mortar venture, it’s important to understand exactly what you’re selling. And just as important, what a prospective purchaser wants to buy.
Now if you’re operating as a corporation, limited liability company, or similar entity, chances are prospective buyers will not want to purchase that entity’s equity (e.g. corporate shares).
Instead, they’ll be interested in buying most (but not all) of the company’s assets.
There are many reasons why an asset purchase and sale agreement makes more since than an equity sale.
For example, the buyer is reducing the risk of being held liable for hidden risks associated with your company (e.g., unpaid taxes).
In addition, there are some assets that may not make sense for a purchaser to acquire. For instance, you might drive a company vehicle that the buyer doesn’t want.
So, when you consider selling your business, first identify the assets you don’t want included in a sale.
And recognize an equity sale is unlikely. Chances are you’ll be keeping ownership of your entity or dissolving it after the asset sale.
Does that mean you never sell equity? No. There are a few situations where an equity sale makes more sense than selling assets.
If you’d like to discuss selling your company’s assets (or equity) with Business Lawyer Mike Young, schedule a phone consultation today.