The purchase agreement used in a business sale usually states that the purchaser is acquiring all of the assets of the seller, except as specifically excluded. The seller should carefully think through exactly what assets should be excluded from the sale. Excluded assets typically fall into two categories – property and money. In the property category, the seller may have artwork, furniture or other personal items that the seller wants to keep. There may also be unique equipment that the buyer does not intend to use but that the seller could use in an unrelated business. In the money category of excluded assets, cash and investments are almost always excluded. Accounts receivable may be excluded. If there are loan receivables, especially loans by the seller to its owners, they should be excluded. Money assets that are not apparent are security deposits and advance payments. Security deposits under leases should be excluded, especially if the purchaser does not intend to occupy the leased premises occupied by the seller. As you can see, it is important to pay attention to what goes on the list of excluded assets in a business sale. If an asset is not listed as excluded, it will be included.
ABOUT GLENN D. SOLOMON
Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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