Compare the actual assets, liabilities, contracts and tax consequences of the proposed structure. Buying selected assets and buying an ownership interest create different diligence questions; neither is universally better.
Describe the two proposals clearly
An asset purchase identifies property and rights to transfer, along with agreed assumed obligations. An equity purchase changes ownership of the entity. Counsel should confirm the legal form and whether special elections or other arrangements alter the expected tax result; commercial shorthand is not enough.
List equipment, member contracts, cash, inventory, accounts receivable, debt, real estate and business names. Determine whether each item sits in the operating company, a separate property company or an owner’s name. The agreement needs to match actual ownership.
Review transferability and historical exposure
For an asset transaction, investigate assignments, consent, account transfers and permits instead of assuming every operating right moves with the keys. Ask advisors about liabilities that may follow an asset purchase despite its stated exclusions. A structure label is not a blanket protection.
For an equity transaction, review the entity’s records, taxes, debt, employment, claims and contracts. Changes of control may still require consent. Identify related-party arrangements and any obligations that must be paid, released or amended at closing.
Compare tax and allocation with the CPA
IRS sale-of-business guidance explains why asset categories matter, and Form 8594 addresses reporting for covered asset acquisitions. Ask the parties’ CPAs to reconcile the allocation with the documents and assumptions. Do not apply one capital-gains rate to the entire price.
Compare the seller’s after-tax position and the buyer’s expected basis or deduction treatment using the actual entity and property facts. Include state treatment and timing in the review. A higher price under one structure may not produce a better net result.
Make the offer and agreement consistent
Have the letter of intent state the proposed structure, property scope and unresolved conditions. Counsel should then align the definitive agreement, disclosure schedules, closing deliveries and protections. Track liens and required releases alongside assumed obligations.
Book a call to map the commercial scope before debating which form wins. Jason can coordinate the transaction discussion, while your legal and tax advisors determine consequences and documentation for the specific wash.
Your decision worksheet
Use these questions to identify the records and decisions that matter to this topic. Bring the open items to your conversation; detailed documents can follow through an agreed private process.
| Question to resolve | Evidence to bring | Why it matters |
|---|---|---|
| What is legally transferring? | Entity records, ownership and the asset schedule. | Match the commercial proposal to the structure counsel documents. |
| What consent is needed? | Lease, member-platform and other material agreements. | Check assignment and control changes under the actual terms. |
| What obligations remain? | Debt, tax, employment and claims schedules. | Discuss exposure rather than assume the structure removes it. |
| How will price be allocated? | CPA-reviewed allocation and relevant asset support. | Keep tax reporting consistent with the agreement and actual scope. |
Sources & evidence
- IRS: sale of a business
Asset categories and purchase-price allocation; not a tax calculation. - IRS: Form 8594 asset acquisition statement
Reporting allocation for covered asset acquisitions. - IDOR: Form CBS-1 business-asset transfer instructions
Illinois business-asset transfer notice; counsel should apply it to the actual transaction. - IRS: business structures
Entity and tax classification; not a recommendation for a particular owner.
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Continue your preparation
- How to sell an Illinois car wash confidentially
- Preparing a car wash financial file for buyers
- Protecting car wash seller information through diligence
Explore an earnings and cash-flow scenario, then book a call to review your questions.
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