I’m Michelle Regner, founder of Business Brokers of America. I help business owners navigate every step of the sale—from organizing financials to negotiating the right deal—so they feel supported, informed, and in control. My mission is simple: to make sure you exit on your terms—with confidence, clean financials, and a strategy that protects what you’ve built.
After 15 years of advising founders on exits—and selling multiple companies myself—I’ve seen firsthand how deal structure can make or break an outcome.
If you’re preparing to sell your business, one of the most overlooked but critical choices you’ll face is whether to pursue an asset sale or a stock sale. That choice can affect your taxes, liabilities, closing timeline, and even whether the deal makes it to the finish line.
Let’s break down the difference—and what sellers need to know.
Related: Planning to sell your business in 2025? These SBA loan changes could make or break your deal
What is an asset sale?
In an asset sale, the buyer is purchasing individual assets of the business—things like equipment, inventory, customer lists, trademarks, and goodwill. The seller retains ownership of the legal entity (like the LLC or S Corp), and the buyer typically forms a new company to operate the business going forward.
This is by far the more common deal structure for small business sales.
Why? Because it minimizes risk for the buyer.
Buyers get to cherry-pick which assets they want—including both tangible and intangible assets—and leave behind any unwanted liabilities, contracts, or obligations. It’s cleaner and lower risk from their perspective, especially if they’re worried about unknown debts down the line.
After the sale, sellers typically dissolve the legal entity or repurpose it for another venture—but the key is that it doesn’t transfer to the buyer.
Related: 6 quirky (but very real) reasons buyers walked away after signing the LOI
What is a stock sale?
In a stock sale, the buyer purchases the entire legal entity—meaning the stock or membership interest in the company. They’re buying the business as-is: all assets, all contracts, and all liabilities, known or unknown.
The company stays intact, and the buyer essentially steps into your shoes.
Stock sales are far less common in small business transactions because they carry more risk for the buyer. But they can be advantageous for sellers—especially in the right circumstances.
In a stock sale, the buyer generally assumes the seller’s basis in the company’s assets. That means they lose out on a fresh depreciation schedule, which affects future tax write-offs.
Key differences at a glance
Here’s how I explain it to clients, often with a hand-drawn table:
| Factor | Asset Sale | Stock Sale |
| Tax Advantage | Buyer | Seller |
| Liability Risk | Lower for buyer | Higher for buyer |
| Simplicity of the Exit | More complex | Simpler |
| Due Diligence Focus | Individual assets | Entire company |
Each structure comes with trade-offs. That’s why we address deal structure early—often before a letter of intent is even signed.
Why most small business deals are asset sales
At BBA, the vast majority of deals we handle—especially those under $5 million—are structured as asset sales.
You typically retain the legal entity, while most of the business operations and assets transition to the buyer. That gives the buyer a fresh start with the parts of the business they want, while helping you avoid post-sale liabilities.
Yes, you may face higher taxes than with a stock sale, especially from depreciation recapture and capital gains, but there are often ways to manage that exposure. For example, seller financing over time may reduce the immediate tax impact.
Asset sales are also preferred by SBA lenders, which are commonly involved in deals under $5M. The buyer’s ability to pledge assets as collateral makes financing more straightforward.
When a stock sale makes sense
Some businesses are better suited to a stock sale. It’s rare under $5 million, but not unheard of—especially if you have:
- Government contracts that are non-transferable
- Licenses or permits tied to the entity (not easily reassigned)
- Highly specialized intellectual property
- A C Corporation (which brings up double taxation concerns)
In these cases, keeping the legal entity intact may offer a simpler path forward. And for sellers, there may be significant capital gains advantages, especially if you qualify for long-term treatment or QSBS (Qualified Small Business Stock) exemption.
Keep in mind: buyers will expect stronger reps and warranties, broader indemnification clauses, and more intensive due diligence to compensate for the added risk.
And because tax treatment can vary depending on your state and entity structure, it’s always smart to consult your CPA or tax advisor before locking in a direction.
Related: How to price a business for sale: 7 mistakes that could cost you the deal
Tax implications you can’t afford to ignore
The tax side of this decision isn’t just a footnote—it can reshape your entire net proceeds.
- Depreciation recapture in an asset sale can result in ordinary income taxes.
- Capital gains may be reduced or even eliminated in some stock sales, especially if the seller qualifies for Small Business Stock (QSBS) treatment or meets long-term holding requirements.
- How the purchase price is allocated in an asset sale impacts how much tax is owed on each category (e.g., goodwill vs. equipment).
A real-world scenario
I’ve seen firsthand how quickly a deal can go sideways when expectations aren’t set early.
In one Zoom meeting, a client suddenly blurted out to the buyer, “What are you talking about? I’m selling this as a stock sale.” The buyer turned to me, clearly confused and frustrated: “What’s he talking about over here, Michelle?” He was visibly upset, and I had to jump in and deescalate things in real time.
That moment underscored just how important it is to set expectations upfront. Deal structure isn’t just a legal formality—it’s a strategic decision that affects price, taxes, and whether the deal closes at all.
How to choose the right structure
There are a few things we consider when helping a seller navigate this decision:
- Business type and entity structure (C corp, S corp, etc.)
- Size of the deal (asset sales are more common under $5M)
- Existing liabilities and contracts
- Tax optimization opportunities
- Buyer appetite and red lines
Bottom line? Don’t wing this part. Work with a broker who understands how to advocate for the structure that protects your interests.
Final thoughts
The difference between an asset sale and a stock sale isn’t just semantics. It can shape the entire outcome of your exit. Sellers need to understand not only what they’re walking away with—but how much of that ends up in their pocket.
At Business Brokers of America, we help you understand both paths, weigh your options, and structure your deal with eyes wide open—so you can protect your legacy and walk away with confidence. Want help mapping the right strategy? Let’s talk through your options together.
Drawing on her firsthand experience launching and scaling startups, Michelle offers unparalleled insight into the realities of small business ownership. She specializes in advising entrepreneurs on growth strategies, exit planning, and digital transformation, having coached dozens to leverage digital marketing, overcome obstacles, and build scalable operational systems.
Michelle’s entrepreneurial journey began after earning her B.A. in Business from Notre Dame de Namur University and a stint at Morgan Stanley. Her impact quickly gained national recognition, leading to features in Fast Company and being named one of the top business leaders by The Economist in 2014. She’s also a sought-after speaker and previously hosted a five-year podcast series.
