Taylor Legal Blog

Asset Sale or Stock Sale — What's the Difference? (video)

Posted by Katherine L. Taylor, Attorney and CPA, Chief Problem SolverOct 10, 20220 Comments

{2 minutes to read}  Are you a business owner looking to sell your business and wondering what the difference is between an asset sale and a stock or ownership sale? 

If you have a company that is either a corporation or an LLC, you, as the owner, own that asset — you own the stock, or you own the LLC interest. That LLC or corporation, however, also owns assets. It might have physical assets like inventory or equipment, or it might have intangible assets such as accounts receivable or goodwill or client lists.

In a stock sale, you, as the owner, or the owners, sell their ownership interest, the LLC interest or the stock, to another person, who will buy the business assets and run the business pretty much as it has been run. That business entity stays in place and continues operating. 

In an asset sale, it's the business entity that is selling its assets to another business entity. So, those individual assets like the equipment, the client list, the goodwill — all of those are sold to another business entity and then your company will be left with no assets. Eventually, you'll dissolve your company. 

That is the basic difference between a stock sale and an asset sale. There are many reasons to choose to have your business sold as an asset sale or a stock sale, but those reasons are way too complicated to get into in this blog. I would, however, advise anyone looking to buy or sell a business, to make sure that they have an experienced lawyer to guide them through the process. 

We can assist you with all of those underlying issues that come along with buying or selling a business — give us a call.


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