Counsel drafts the wrapper. Jason Taken is a business broker. He will flag the fork. He will not pick your tax outcome.
What does an asset deal actually move on a plant floor?
Chosen assets: iron, inventory, name if you sell it, contracts that assign, and the going-concern goodwill the parties allocate. Chosen liabilities. A step-up in depreciable basis that the CPA has to model. Form 8594 on applicable asset deals under IRC § 1060 (Source: IRS Form 8594). Purchase-price allocation with heavy equipment is the Class V fight.
Census CBP 2023 counted 284,452 plants, 68.4% under twenty employees (Source: Census CBP). Most of those closes, if they close, close as assets.
| Question | Asset sale | Stock / interest sale |
|---|---|---|
| Who keeps the legal entity? | Seller | Buyer steps into it |
| Unknown tanks and old contracts | Buyer usually leaves them unless assumed | Buyer inherits more of the history |
| Depreciable basis | Often a step-up; CPA models it | Inside basis stays, with exceptions counsel names |
| Government contracts | Often need novation to a new name | Entity may already be the contractor |
| ITAR registration | Buyer may need its own registration | Buyer amends the existing one |
| Typical Main Street path | Yes | When the name has to live |
SBA 7(a) change-of-ownership files still live inside a $5 million box and a 10% injection (Source: SBA). Lenders have opinions about structure. Ask them before you fall in love with a noun.
When does stock stop being a tax argument and start being a survival argument?
When a prime will not novate. When a registration is painful to re-paper. When ITAR allocates differently and the empowered official is already in the seller entity. When government contracts are the book. Those are counsel facts. This FAQ will not invent a novation timeline.
BizBuySell’s 223-day manufacturing median (Source: BizBuySell) is long enough for structure to be decided twice if you decide it late. Put the wrapper in the LOI.
What this FAQ will not decide for you
It will not pick ordinary income versus capital gain. It will not allocate Class V. It will not tell you a stock deal “avoids” environmental history — it usually inherits more of it. It will not tell you an asset deal “avoids” WARN. Employment losses around a sale can still trigger notice. The FAQ index keeps WARN on its own slugs.
How should allocation and Form 8594 stay consistent with the appraisal?
On an applicable asset deal, Class V personal property and the M&E appraisal should not tell two stories. If the appraiser wrote OLV and the 8594 writes a continued-use fantasy, the CPA and the IRS are not the only people who will notice. Lenders notice. Buyers’ QoE firms notice.
Put the allocation methodology in the LOI if the iron is material. Do not wait until the week of close to discover that the seller wanted residual goodwill and the buyer wanted the step-up in the presses. Purchase-price allocation is the long fight. This FAQ only says the wrapper and the allocation have to live in the same universe.
Stock deals do not get you a free 8594 holiday if you later treat the file like an asset deal in the CIM. Pick the wrapper. Write the tax sentences to match. Then stop using the other noun in the teaser.
Unknown environmental history is why many buyers still want assets even when stock would be simpler for contracts. A stock buyer inherits more of the entity’s past. A Phase I still helps. It does not turn a stock deal into a chosen-liability deal.
What should you bring if the only fight so far is “assets or stock”?
The contract stack. Whether any customer forbids assignment. Whether you are registered with DDTC. Whether a 7(a) lender is already in the room. Whether the building is inside the entity. Your CPA’s name.
Sellers sometimes want stock because they heard it is “cleaner.” Buyers sometimes want assets because they heard it is “safer.” Both adjectives are incomplete. Stock can be cleaner when the name must live. Assets can be safer when the history is wet. The compare owner is the scorecard. This FAQ is only the which.
If 7(a) is in the stack, ask the preferred lender which wrapper they have closed on a plant. Some will fund either. Some have habits. A habit is not a statute, but it is a calendar. Do not discover the habit in week nine. Put the wrapper in the letter of intent so allocation, novation, and registration work do not restart after exclusivity.
If any customer forbids assignment, say so before anyone falls in love with an asset wrapper. Survival of the name is a contract fact, not a tax vibe. Form 8594 still needs a CPA on applicable asset deals, and the written appraisal story should not contradict that allocation.
Educational information only. Confirm tax and contract questions with licensed people. After the compare owner, the path is a confidential intro call.