# Small-Business Asset Purchase Agreements in the United States[^about]

Understand what an APA transfers, identify assets and liabilities, and connect the purchase price to an operating-business handover.

## What should an APA cover when buying a small business? {#small-business-apa-overview}

**Short answer.** A small-business asset purchase agreement should connect the agreed purchase to the assets, contracts and operating resources the buyer needs to take over the business. [^sba-operating-business-diligence]

This guide focuses on purchases priced at approximately $1 million or less, including local service businesses, restaurants and online businesses. That is a scope choice, not a legal threshold or a statement about market practice. A business with EBITDA of $1 million or less can have a purchase price above that range; earnings and purchase price are different measures.

For an operating business, the proposed review starts with the assets and dependencies that make the purchase useful. Does the buyer need the premises, vehicles, equipment, inventory or open customer orders? Which contracts need counterparty consent, and which licenses or permits can transfer rather than requiring a new application? A contractor business may depend on licensed personnel; a restaurant may depend on its lease and permits; an online business may depend on domains, software rights and provider accounts. [^sba-operating-business-diligence]

Use those findings to choose the closing mechanics. If a critical consent is outstanding, address whether closing waits for it, the parties arrange a lawful interim solution, or the affected asset is excluded with a price change. Identify who obtains lien releases, handles customer-data transfer, addresses employee offers and accrued obligations, and supplies any agreed seller training or transition services. These are questions to resolve, not a nationwide promise that every resource transfers with the sale. [^sba-operating-business-diligence]

The actual agreements, issuing authorities and applicable state or industry rules determine transferability. This overview supplies review questions, not a finding that a particular business can operate under the buyer after closing. [^sba-operating-business-diligence]

The [acquisition financial-model guide](/practice-guides/transaction-workbooks/building-an-auditable-acquisition-workbook) and its reusable workbook help separate purchase consideration, financing, closing payments and operating cash requirements. The [asset-and-liability perimeter](#asset-and-liability-perimeter) below addresses what the purchase includes.

## How do we specify which assets and liabilities change hands? {#asset-and-liability-perimeter}

**Short answer.** In an asset purchase agreement, the buyer and seller should expressly describe the purchased and excluded assets so they can tell what changes hands and what the seller keeps, following Imke Ratschko's drafting recommendation. [^ratschko-clear-asset-inclusions-exclusions]

Read four categories together: purchased assets, excluded assets, assumed liabilities and liabilities retained by the seller. Make each asset identifiable and reconcile exceptions with the transfer language. For assumed obligations, identify the contract or category and the relevant performance period. For retained obligations, state the allocation between buyer and seller without suggesting that their agreement determines a third party's rights. [^ratschko-clear-asset-inclusions-exclusions][^hodson-contractual-liability-allocation]

The following example is synthetic. It illustrates choices for a plumbing-business purchase, not observed terms or a mandatory allocation:

| Item | Decision the parties need to express |
| --- | --- |
| Vans and tools | Which vehicles and equipment transfer; which titles, liens and release documents need review. |
| Cash and receivables | Whether the seller keeps bank balances and pre-closing receivables or the buyer acquires specified amounts. |
| Work in progress | Which jobs the buyer completes, who receives remaining payments, and who bears the related costs. |
| Customer deposits and warranties | Whether and to what extent the buyer assumes prepaid jobs or warranty work, including timing limits. |
| Premises and supplier contracts | Which agreements are included and what consents or replacement arrangements are needed. |
| Name, customer records and software | Which rights and records transfer, subject to ownership, license and data-use restrictions. |

A contractual allocation between buyer and seller does not by itself answer what rights a third party has under applicable law. Review third-party exposure separately; this guide does not determine successor liability in any particular state, industry or transaction. [^hodson-contractual-liability-allocation]

## Why does an asset purchase need a purchase-price allocation? {#purchase-price-allocation}

**Short answer.** For an asset acquisition covered by the IRS Form 8594 instructions, allocating the purchase price determines the purchaser's basis in each acquired asset and the seller's gain or loss on each transfer. [^irs-8594-allocation-purpose]

The IRS Purpose of Form paragraph describes reporting by both seller and purchaser on Form 8594 for a sale of a group of assets making up a trade or business if goodwill or going-concern value attaches or could attach and the purchaser's basis is determined only by the amount paid. That paragraph is not an exhaustive applicability test; the full instructions include exceptions. It does not say that every asset sale requires the form. [^irs-8594-filing-conditions]

Have the tax advisers determine applicability and reconcile the allocation, payment structure and reporting responsibilities with the agreement. Ask the tax advisers how the actual payment structure affects their analysis; this guide supplies no preferred allocation or nationwide tax solution. [^irs-8594-allocation-purpose]



[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-09-28. License: CC BY 4.0. Steven Obiajulu, J.D. edits this topic article for U.S. small-business asset purchases priced at approximately $1 million or less; purchase price differs from EBITDA; state and industry rules require separate review coverage. It synthesizes legal sources and is not legal advice. This article is for informational purposes only and does not create an attorney-client relationship. Source excerpts and linked materials belong to their owners. CC BY 4.0. Cite as Steven Obiajulu, *Small-Business Asset Purchase Agreements in the United States*, OpenAgreements (last updated September 28, 2026), https://openagreements.org/practice-guides/asset-purchase/us.

[^sba-operating-business-diligence]: **U.S. Small Business Administration: Plan your business — buying an existing business** — "Don’t be afraid to ask questions about contracts, leases, existing cash flow, and inventory." *U.S. Small Business Administration, Plan your business, Buy an existing business or franchise (accessed Sept. 28, 2026).* <https://www.sba.gov/counseling/plan-your-business/>

[^ratschko-clear-asset-inclusions-exclusions]: **Imke Ratschko: The Basics of an Asset Purchase Agreement — Ratschko PLLC** — "So I recommend that the description makes it very clear which assets are included, and which are excluded." *Imke Ratschko, The Basics of an Asset Purchase Agreement, Ratschko PLLC (July 25, 2022; updated July 28, 2022).* <https://www.newyorksmallbusinesslaw.com/the-basics-of-an-asset-purchase-agreement/>

[^hodson-contractual-liability-allocation]: **Samuel D. Hodson: Successor Liability Risks in Asset Purchase Agreements — Taft** — "The asset purchase agreement assigns responsibility between the parties for the seller’s obligations." *Samuel D. Hodson, Successor Liability Risks in Asset Purchase Agreements, Taft Law Bulletins (June 26, 2020).* <https://www.taftlaw.com/news-events/law-bulletins/successor-liability-risks-in-asset-purchase-agreements/>

[^irs-8594-allocation-purpose]: **Internal Revenue Service: Instructions for Form 8594** — "An allocation of the purchase price must be made to determine the purchaser's basis in each acquired asset and the seller's gain or loss on the transfer of each asset." *Internal Revenue Service, Instructions for Form 8594 (rev. Nov. 2021), General Instructions, Purpose of Form; Allocation of consideration (accessed Sept. 28, 2026).* <https://www.irs.gov/instructions/i8594>

[^irs-8594-filing-conditions]: **Internal Revenue Service: Instructions for Form 8594 — filing conditions** — "Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if goodwill or going concern value attaches, or could attach, to such assets and if the purchaser's basis in the assets is determined only by the amount paid for the assets." *Internal Revenue Service, Instructions for Form 8594 (rev. Nov. 2021), General Instructions, Purpose of Form (accessed Sept. 28, 2026).* <https://www.irs.gov/instructions/i8594>

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