What Do Sellers Keep in an Asset Sale?

Jonah Pollone

Sellers Seller Articles Seller FAQ

If you’re selling your business, there’s a good chance that it will be sold using an asset sale structure.

Some business owners hold the misconception that an asset sale is the same as liquidating a business’s inventory and furniture, fixtures and equipment (FF&E), but that isn’t the case here.

An asset sale involves selling your business’s individual assets as a package deal to an acquirer and includes more than just the “tangible” assets of your business.

At MidStreet, we've worked with hundreds of business owners who sold their businesses in asset sales, so we have an in-depth understanding of the ways that these sales are structured. 

In this blog, we’ll define an asset sale, talk about what’s typically kept by the seller, and discuss a few scenarios in which the seller may choose to negotiate retaining possession of certain assets.

Let’s get to it!

What is an Asset Sale?

An asset sale occurs when you sell the individual assets of your business to a buyer. This doesn’t just mean the hard assets like vehicles, equipment, and inventory. It also refers to your business’s goodwill, licenses, leasehold improvements, and other “intangible” assets.

In our experience, business acquisitions are often structured as asset sales if the business’s revenue is between $1-25 million.


Difficult to assign contracts, C-Corporation status, and other factors could increase the likelihood or requirement that you sell in a stock sale. Consult your team of professional advisors including attorney, CPA, and M&A advisor for guidance.

In an asset sale structure, assets are divided into five categories, some of which are taxed differently than others. These categories include:

  1. Furniture, fixtures, and equipment (FF&E) 
  2. Inventory 
  3. Non-competes and other intangibles
  4. Seller training and transition assistance
  5. Goodwill

Where your business's assets fall in these categories will be negotiated during the purchase price allocation of your sale. To learn more about this, check out our blog, "What Is Purchase Price Allocation in a Business Sale?"

If it’s likely that you will be selling your business using an asset sale structure, then you’ll want to have a good idea of what excluded assets you’ll keep after the assets have been transferred.

Answers may vary depending on who you’re selling to, but let’s take a look at what items are most often retained by a seller in an asset sale.

What Do Sellers Keep in an Asset Sale?

In an asset sale, the seller often retains possession of the legal entity of the business, accounts receivable, accounts payable, and other liabilities.

Asset sales are typically structured this way so that the seller can transfer a business’s assets “free and clear” of any liabilities, while also keeping the cash they earned pre-closing.

In other words, if you racked up debts to help your business grow, it’s your responsibility in an asset sale to pay them off.

If your business was holding excess cash or accounts receivable as a result of your successful operation, the buyer usually will not request these items.

Keep in mind, these things are “typical” assets and liabilities retained by the seller during a business acquisition, but almost everything can be negotiated depending on who your buyer is and what you’re willing to transfer.


In our experience, most asset sales will allow for you to retain cash. In other words, you will not have to deliver working capital to the buyer.

Once the assets have been transferred to the buyer, the legal entity that the business was owned by remains with the seller. If liabilities associated with the seller were to arise post-closing, any litigation would be taken out through the legal entity that the seller retained.

Attorneys will often recommend that the seller retain their business liability insurances for several months after the sale as a form of protection. As always, please seek the advice of an attorney.

Negotiable Assets

As is often true in mergers and acquisitions, there are several exceptions to what’s “common.” So, there are certain circumstances in which it can make sense to negotiate what assets are transferred or retained by the seller.

In some cases, things like new equipment leases or equipment repairs can be transferred to the buyer instead of being paid by the seller.

This can happen if the seller received no financial benefit to owning or repairing a vehicle or piece of equipment (i.e. it hadn’t been delivered or repaired before closing), but the buyer saw it as necessary to continue growing or operating the company, and agreed to take on the expense.

Anything that the seller wants to take with them, such as company vehicles or even select employees (which is rare, but not unheard of) will be listed as “excluded assets” in the asset purchase agreement. This helps to provide clarity and avoid any confusion on what assets are being transferred to the new owner.

Deciding What to Transfer

Now that you know a little more about what a seller keeps in an asset sale post-acquisition, you can start to consider what assets you’ll be transferring, which ones you’ll likely keep, and which ones could be negotiated.

If you have a company vehicle or piece of equipment that you’ve grown particularly fond of, it’s very possible that you’ll be able to take it with you once you sell your business. Keep in mind, though, that its value could (and likely will) come out of the purchase price you get for your business, especially if the asset is necessary to do business.

At the end of the day, it all comes down to what you and your buyer are willing to negotiate. Is it worth it to heavily negotiate assets that are only worth a few thousand dollars? It’s really up to you and your M&A advisor to decide.

We’ve sold hundreds of businesses in asset sales and have seen agreements on excluded assets achieved without a ton of headache. There are also situations that require a bit more negotiation, and we’ve been a part of this as well.

If you’re considering selling your business, contact us today. We’d love to learn more about your business and offer our guidance.


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