Are you selling the company or its assets?
The legal form changes what transfers and what may remain behind.
In a stock deal, the buyer generally acquires the equity interests of the company. The legal entity continues to own its assets and remain responsible for its liabilities, subject to the protections negotiated in the purchase agreement.
In an asset deal, the buyer generally acquires specified assets and assumes specified liabilities. The seller retains the legal entity and anything not transferred. Contracts and permits may require assignment or third-party consent; the treatment of employees depends on applicable employment law and the transaction structure and may require notice, consultation, transfer procedures, or new employment offers.
Buyers often prefer asset transactions because they can select what they acquire, limit assumed liabilities, and potentially receive a tax basis step-up in acquired assets. Sellers often prefer equity transactions because they can transfer the operating entity in one transaction and may receive more favorable tax treatment. Those are tendencies, not rules.
Entity type, tax elections, depreciation recapture, state taxes, inherited liabilities, contract assignability, regulatory approvals, and the parties’ relative negotiating leverage can change the analysis. Even the labels are not conclusive; a transaction documented as an equity purchase can contain economic protections that shift substantial historical risk back to the seller.
Evaluate structure together with price. A buyer that benefits from an asset structure may be able to share part of that benefit through higher value or other terms. Conversely, an apparently higher price may not compensate the seller for additional tax or retained liabilities.
Transaction counsel and tax advisers should model the specific alternatives before the letter of intent (LOI) fixes the structure.