Asset Sale

In an asset sale, the buyer chooses which assets and liabilities to acquire, such as equipment, property, inventory, contracts, intellectual property and customer relationships. The seller company remains in existence and keeps any assets and liabilities not sold.

For example, a buyer might acquire a manufacturing business's factory, machinery, brand and customer contracts, while leaving behind its old lawsuits and tax liabilities with the seller.

Buyers often prefer asset sales because they can avoid unknown or unwanted liabilities, and in some tax systems they can increase the tax value of the acquired assets, leading to larger future tax deductions.

Sellers often prefer share sales, which are usually simpler and may be more tax-efficient for them. Asset sales can also be more complex, because individual contracts, permits and licences may need to be transferred, often requiring consent from third parties, and employees may need to be transferred under employment laws.