What Is An Asset Purchase?
An asset purchase is a business acquisition where a buyer purchases specific assets of a company, rather than acquiring the entire company. This type of acquisition is a popular strategy for businesses looking to expand their operations or acquire valuable assets, without taking on the risks and liabilities associated with the entire company.
I recently used an asset purchase to sell one of the brands under our family LLC, called Live Camp Work and found that it was the perfect business sales strategy for entrepreneurs who have multiple brands, websites, projects, or side hustles under a larger umbrella.
I’m now in love with this structure and can see so many future use cases for us to continue to build, scale, and then eventually sell some of the projects we love and care about. Let’s talk about the benefits of this business acquisition!
Benefits of an Asset Purchase Agreement
One of the primary benefits of an asset purchase is that the buyer can select and acquire only the assets they are interested in, rather than acquiring the entire company, including its debts and liabilities. This can be particularly advantageous when buying a business that has significant liabilities, such as outstanding debts or legal disputes.
Another benefit of an asset purchase is that it allows the buyer to choose which assets they acquire, which can include tangible assets, such as equipment and inventory, as well as intangible assets, such as intellectual property, trademarks, and patents. This flexibility allows buyers to acquire the assets that are most valuable to their business while leaving behind any assets that may be less important or less valuable.
Using An Asset Purchase & What To Sell/Buy
Asset purchases are commonly used in a variety of industries and business types.
For example, a manufacturing company may purchase the equipment and inventory of another manufacturing company to expand its operations, while a technology company may acquire the patents and intellectual property of a smaller competitor to gain a competitive advantage.
In our situation, we were wanting to sell one specific brand that included lots of digital assets like blogs, courses, books, and a large email list, but this will obviously differ from case to case.
Here are some examples of the types of assets that can be purchased in an asset purchase:
- Tangible Assets: These can include equipment, machinery, vehicles, inventory, and real estate. These assets can be essential to a business’s operations, and an asset purchase can be an effective way to acquire them without taking on other risks or liabilities.
- Intangible Assets: These can include intellectual property, patents, copyrights, and trademarks. These assets can be incredibly valuable to a business, as they can provide a competitive advantage, but can also be difficult to acquire without an asset purchase.
- Contracts and Agreements: An asset purchase can also include the purchase of contracts and agreements, such as leases, supply agreements, or distribution agreements. These can be particularly valuable for businesses that are looking to expand their operations in a specific market or region.
Asset Purchases For Virtual Entrepreneurs
For virtual entrepreneurs selling content in the form of blogs, ebooks, print-on-demand books, and courses, an asset purchase can work in a similar way as it does for other types of businesses. In this case, the buyer would be purchasing specific assets related to the content, such as the rights to intellectual property or the website or platform where the content is hosted.
For example, a buyer may be interested in purchasing a popular blog that generates significant traffic and revenue. In this case, the asset purchase could include the transfer of ownership of the blog’s domain name, hosting account, and any associated intellectual property, such as trademarks or copyrights. The buyer could then continue to run the blog and generate revenue from it, without taking on any of the liabilities or debts associated with the original owner.
Similarly, an asset purchase could be used to acquire the rights to a popular ebook or course.
In this case, the buyer would acquire the intellectual property rights to the content and could continue to sell it under their own brand, without any obligations to the original author or owner. This can be particularly advantageous for buyers who are interested in expanding their content offerings but do not have the time or resources to develop their own content from scratch.
Don’t Forget Your Socials & Email List
I mentioned this quickly before, but its worth restating… For virtual entrepreneurs, asset purchases may also include digital assets, such as email lists, social media accounts, and other online marketing tools. These can be valuable assets for buyers who are looking to expand their reach and audience and can help to quickly grow their business.
Overall, an asset purchase can be a useful tool for virtual entrepreneurs selling content, allowing them to acquire valuable assets without taking on the risks and liabilities of the entire business. It’s important to carefully consider the assets being purchased and to conduct thorough due diligence to ensure that the assets are valuable and that there are no hidden risks or liabilities associated with them.
Why We Chose An Asset Purchase
Choosing to sell your business assets is a big deal. You’ve spent time and energy creating and growing an idea to a stage where other people find its value appealing and parting with your business at this point can be an emotional decision.
With that said, for Live Camp Work, we were ready to let the brand prosper beyond the time, energy, and resources we had available to put into it- so it was time to sell it. And because the brand was part of our family LLC and not a business entity of its own, the asset purchase as the best (possibly the only) route worth exploring!
Selling just specific assets that were all tied to the Brand (and ultimately the trademark and copyright for Live Camp Work) provided us with some very attractive benefits that made the process a little easier to handle emotionally.
- Maximizing Value: One of the primary benefits of an asset purchase is that it allows the seller to maximize the value of their assets. By selling specific assets, rather than the entire business, the seller can command a higher price for the assets that are most valuable, while leaving behind any assets that are less valuable or have little value to potential buyers. We sold the website, 2 online courses, 2 eBooks, 2 print books, social accounts as well as the email list.
- Simplifying the Sales Process: An asset purchase can also streamline the sales process, making it easier for the seller to find a buyer and complete the transaction. Since the seller only sells specific assets, rather than the entire business, the sales process can be more straightforward and less complex than selling the entire business. You basically list all the assets, set a price, agree on terms, and boom- you just sold your business!
- Providing Flexibility: An asset purchase can provide flexibility for the seller, allowing them to retain any assets that are not part of the sale, such as personal assets or assets that are not essential to the business. This was important as we have multiple brands under the family LLC and didn’t want the sale to affect any other websites, products, or services and the events we operate in the same space.
- Protecting Confidentiality: Finally, an asset purchase can help protect the confidentiality of the seller’s business. Since the buyer is only acquiring specific assets, rather than the entire company, the seller can retain control over confidential information, complete financials, and trade secrets they may not want to share with potential buyers. again another big one right? We didn’t need to disclose how much we make from the whole family LLC – just the assets tied to the brand being sold!
Asset Purchase Agreements
In conclusion, choosing to sell your business assets with an asset purchase can provide a number of benefits for sellers that I personally think are amazing! If you’re considering selling your business, it’s worth exploring the option of an asset purchase to determine whether it’s the right strategy for your needs.
And lastly, I’ll just say… an asset purchase is a great strategy for businesses looking to acquire specific assets, without taking on the risks and liabilities of an entire company. This type of transaction can provide flexibility, allowing buyers to acquire the assets they need to grow their business while avoiding unnecessary risks and liabilities.