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Watch your assets. 
An asset sale, you conclude, is much simpler than a stock sale. No worries about successor liability, right? Not quite. Although the general rule is that a purchaser of all or substantially all of the assets of another company does not assume the liabilities of that company, there are exceptions. Here are five practical tips to help you get what you want (the assets) and not what you don’t (the liabilities): 

  • Expressly state it. Make it absolutely clear in the agreement that you are not assuming liabilities (or, if you are assuming some liabilities, precisely identify them). 

  • Document arms-length terms. Be particularly careful to document arms-length, commercially reasonable terms and conditions if the seller is insolvent or undercapitalized to avoid what otherwise may be considered a fraudulent conveyance.

  • Back it up. Obtain strong representations, warranties and indemnities from the seller and be certain that the seller has the financial strength to support the representations and warranties and satisfy the indemnity (with, for example, an escrow).

  • Make it different. Make it clear that the purchaser is different from the seller by, for example, maintaining different management, operating under a dissimilar name and not suggesting in any way that you have assumed liabilities that you did not agree to assume (e.g., paying a debt for which you are not responsible).

  • Don't allow dissolution. Prohibit the dissolution of the seller immediately following the asset sale. ​
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