1. What Is an Asset Transaction?
In an asset transaction, the buyer purchases specific business assets directly from the seller rather than acquiring the selling entity. The seller's legal entity stays intact and retains any assets or obligations not listed in the agreement.
Business sale transactions turn on which assets are included and which liabilities the buyer agrees to assume. The parties define that boundary in the asset purchase agreement before the deal moves forward.
Assets commonly transferred include:
- Tangible assets: machinery, equipment, inventory, vehicles, and real property
- Intangible assets: trademarks, patents, copyrights, trade secrets, and domain names
- Contract rights: customer agreements, vendor contracts, and license agreements
- Goodwill: the going-concern value of an operating business
Because the buyer does not absorb the selling entity, pre-existing liabilities, including undisclosed litigation, tax assessments, and environmental obligations, generally remain with the seller. That protection is why buyers favor this structure when hidden exposure is a concern.
2. Structuring the Asset Purchase Agreement
The asset purchase agreement (APA) controls the entire transaction. It defines what transfers, allocates risk between the parties, and establishes the conditions each side must satisfy before closing.
Every APA addresses these core provisions:
| Section | Purpose |
| Acquired Assets / Excluded Assets | Identifies exactly which assets transfer and which remain with the seller |
| Purchase Price and Allocation | Sets total consideration and assigns value to each asset class |
| Representations and Warranties | Each party's factual statements about the business and the deal |
| Covenants | Pre- and post-closing obligations of each party |
| Indemnification | Remedies for breach and post-closing risk allocation |
| Conditions to Closing | Events that must occur before either party is obligated to proceed |
Purchase price allocation carries real consequences for New York State income tax reporting. The values assigned across asset classes directly affect each party's taxable gain or loss, so buyers and sellers often negotiate the allocation as a material term of the deal.
3. New York Law Requirements for Asset Sales
Board and Shareholder Approval (Bcl §909)
BCL §909 requires board approval for a sale, lease, exchange, or other disposition of all or substantially all of a corporation's assets outside the ordinary course of business, subject to the applicable shareholder approval requirements. Depending on the corporation’s structure and governing documents, the transaction may also require approval by the requisite shareholder vote under BCL §909. Whether a sale involves “all or substantially all” of a corporation’s assets is determined by the overall effect of the transaction, not by a single fixed percentage of asset value.
Sellers organized as limited liability companies or partnerships follow separate approval processes under the New York Limited Liability Company Law, Partnership Law, and their governing documents.
Dissenter'S Rights (Bcl §910)
Under BCL §910, shareholders who vote against an asset sale subject to §909 may demand that the corporation pay fair value for their shares. This appraisal right creates defined exposure for sellers. Our firm evaluates dissenter risk during the transaction approval process, before the shareholder vote is called.
Real Property Considerations
If the transaction includes New York real property, the parties may need to account for New York State and, where applicable, New York City real property transfer taxes. Property located in New York City carries an additional city-level Real Property Transfer Tax. The parties should complete title searches and any required transfer tax filings before recording deed or other conveyance documents.
The New York Business Corporation Law (BCL) governs the approval process for asset sales by New York corporations. Two provisions apply to most business asset transactions.
4. Due Diligence in Asset Transactions
Asset transaction due diligence differs from entity-level review. The buyer must confirm that the seller owns, and can freely transfer, each asset listed in the APA. Corporate due diligence here means tracing ownership and clearing encumbrances asset by asset, not simply reviewing corporate records.
The main workstreams:
- UCC financing statement searches, judgment lien searches, and tax lien searches verify that listed assets are free of third-party claims
- Customer and vendor contracts must be reviewed for assignment restrictions; third-party consents are often required before any transfer
- IP registrations must stand in the seller's name, not licensed in from a third party, before they can transfer
- Licenses and permits issued to the seller's entity may not carry over automatically and may require re-application after closing
5. The Closing Process
Closing requires the simultaneous exchange of transfer documents and purchase consideration. The parties execute a bill of sale for tangible personal property, assignment and assumption agreements for contracts and intellectual property, and separate conveyance instruments for any real estate.
Standard closing deliverables:
- Bill of Sale
- Assignment and Assumption Agreement
- Intellectual Property Assignment (if applicable)
- Deed (if real property is included)
- Officer's Certificate confirming representations and warranties remain accurate
- Board resolutions and shareholder vote records under BCL §909
- Escrow or indemnification holdback terms for post-closing claims
Post-closing purchase price adjustments are standard. The APA typically provides a mechanism for adjusting the final price based on inventory counts, accounts receivable, or working capital levels measured at closing.
6. Frequently Asked Questions
What assets does a buyer typically receive?
The APA schedule defines everything included. Equipment, inventory, intellectual property, customer contracts, and goodwill are the most common inclusions. Any asset not listed on that schedule stays with the seller.
Does the buyer take on the seller's debts?
Only the liabilities expressly listed in the assumption schedule transfer to the buyer. Courts have recognized limited exceptions under successor liability theories, including de facto merger and continuation of enterprise, which can reach buyers who structured a transaction primarily to avoid the seller's obligations. Our attorneys advise buyers on how to structure the deal to limit that exposure.
When does a New York corporation need shareholder approval?
BCL §909 may require a shareholder vote when a New York corporation sells all or substantially all of its assets outside the ordinary course of business, depending on the corporation’s structure and governing documents. The standard is qualitative: a sale of the company's primary operating assets almost always triggers it, regardless of the percentage of total asset value involved.
How long does an asset transaction take to close?
Straightforward deals can close in 30 to 60 days from letter of intent. Transactions involving regulatory approvals, real property, or third-party contract consents generally take 90 to 180 days. Setting a realistic timeline at the outset avoids last-minute delays.
7. Speak with Our Attorneys
When the scope of transferred assets or assumed liabilities is not defined with precision, acquisition disputes often follow. Our firm advises buyers and sellers on agreement structure, New York law compliance, and post-closing risk management. Contact our attorneys to schedule a consultation.
30 Mar, 2026
