A "sale of assets" refers to a sale in which a business entity sells some or all of their assets. These may include the sale of tangible items such as merchandise or property. More often, a sale of assets involves the sale of non-physical goods, such as copyrights, patents, licenses, and stock holdings.
A business organization may choose to sell only some of their assets in a separate sale instead of selling all of the assets together. However, most sales of assets occur as a part of the business merger and acquisition process. For example, one business may purchase another business in an acquisition. The acquisition process implies that all of the assets of the business being sold are being transferred in whole to the purchasing company.
Sales of business assets are usually treated differently than the sale of consumer goods. In a sale of assets, the buyer usually must be fully informed as to the nature and quality of the types of assets being transferred.
Generally, any type of asset held by a business can be sold, so long as the sale itself is legal. Depending on the type of business form, the consent of the owners and/or shareholders of the business selling the assets may also be required for a sale of assets.
The following are usually the subject of a sale of assets:
- Real property, such as the building where the business is located
- Other kinds of physical property, such as equipment, fixtures, furniture, and machinery
- Non-physical items, including business names, patents, copyrights, trademarks, permits, insurance policies, contracts, and future interests
- Stocks, trust funds, and other types of securities
Yes. A sale of even a few assets can be extraordinarily complex, especially if the assets have a high market value. Whenever a sale of assets is to take place, the businesses involved will usually come up with a “sale of assets” agreement. This type of agreement is a business contract stating:
- How the sale will be organized and conducted
- Which assets will and will not be transferred
- How the buyer will fund the payments
- Details regarding shareholder approval, if necessary
- Provisions regarding the debts and liabilities of the selling company
If the sale of assets is occurring through an acquisition, the agreement is usually known as a “broad transfer” agreement or provision. This type of agreement states that the company being acquired is transferring all of their assets in full to the buying company.
Some other considerations that the parties must keep in mind during a sale of assets include: tax and gift tax laws, shareholder laws, and rules regarding non-sale clauses.
The advice a lawyer gives is sometimes indispensable when it comes to a sale of assets. An experienced business lawyer can help draft and review the sale of assets agreement, and can help finalize the terms of sale. Also, in the event that there is a dispute over the sale, your lawyer can help represent you in court to obtain the proper legal remedy.