Offers & due diligence
Should I sell company assets or ownership interests?
How an asset sale and an ownership sale differ on liabilities, contracts, permits and taxes, and when each one fits.
By Michael D. Rubin, CEO & Founder · September 2026 · 797 words
Buyers of private companies usually prefer to buy assets, but selling your ownership interests (your shares or LLC membership units) can be better for you when contracts, licenses or permits are hard to transfer, or when your entity type makes an asset sale expensive at tax time. The right answer depends on your entity, your contracts and what the buyer is willing to pay for each structure.
Decide with your CPA and transaction attorney before you sign a letter of intent, because the structure is written into it and is hard to change later.
The two structures in plain terms
In an asset sale, your company sells what it uses to do business: equipment, inventory, customer relationships, phone numbers, the trade name and the goodwill. Your company still exists afterward, typically keeps its cash, pays off its debts, and keeps any liabilities the buyer did not agree to take. You then wind it down.
In an ownership sale, you sell the shares of your corporation or the membership interests of your LLC. The buyer steps into your shoes. The same entity, with its contracts, permits, bank history and past obligations, simply has a new owner.
Owners often assume they are selling “the company” either way. Legally they are not, and the difference shows up later: in who answers for a customer claim, an unpaid bill or a tax question that surfaces two years after closing.
How the two compare
| Factor | Asset sale | Ownership sale |
|---|---|---|
| What transfers | Selected assets and chosen contracts | The whole entity, including its history |
| Past liabilities | Mostly stay with your old entity | Go with the entity; buyer relies on your indemnity |
| Customer and supplier contracts | Each may need to be assigned, sometimes with consent | Usually stay in place, unless a contract requires consent on a change of owner |
| Licenses and permits | Buyer may need to apply for its own | Often continue, subject to the rules of each license |
| Employees | Hired again by the buyer’s entity | Stay employed by the same company |
| Buyer’s tax position | Can usually write off much of the price over time | Generally cannot, which lowers what some buyers will pay |
| Seller’s tax position | Depends heavily on entity type and how the price is allocated | Often simpler; your CPA confirms |
| Paperwork | More transfer documents and consents | Fewer transfers, deeper diligence on the entity |
When an ownership sale makes more sense
- Your key customer contracts or government contracts cannot be assigned without consent you may not get.
- The business depends on permits, registrations or supplier authorizations that would take a new entity months to obtain.
- You have a long, favorable lease that the landlord might renegotiate if asked to approve a new tenant.
- Your company is a C corporation, where selling assets can mean tax at the company level and again when proceeds reach you. Your CPA will explain how that applies to you.
- The buyer is comfortable with the entity’s history after diligence and values continuity.
When an asset sale is the practical choice
Asset sales are common when the buyer is financing the purchase with an SBA or bank loan, when the company has a long history the buyer does not want to inherit, or when only part of the business is being sold. Many buyers will pay more for assets because of the tax write-offs available to them, which can offset some of the tax cost to you. That trade is worth measuring rather than assuming.
There are also middle paths. Certain tax elections and pre-sale reorganizations can let a transaction be treated like an asset sale for tax purposes while the entity itself transfers. Whether one fits your situation is a decision for your CPA and attorney.
Questions to settle before the letter of intent
- What entity type is the company, and has it changed in recent years?
- Which contracts, leases and licenses require consent to transfer, and from whom?
- What would each structure leave you after tax, in dollars? Ask your CPA for both numbers.
- Which liabilities are known, and which would stay with you in each case?
- Is the buyer offering a different price for each structure, and does the difference cover the tax cost?
How MDR & Associates approaches structure
Structure is agreed in the letter of intent, so we raise it while buyers are still competing, not after one has exclusivity. When several offers arrive with different structures, we set them side by side on what you keep, as described in how to compare offers when selling your business, and we bring your CPA and attorney in early. Offer review and legal documents are steps seven and nine of our process.
If you are weighing a sale and want to understand what your company is worth under different structures, start a confidential conversation with us.
Where this fitsHow a business sale works, step by step →