Excluded Assets currently on balance sheet - Seller Personal Vehicle?

November 21, 2023

by a searcher from Michigan State University in Rochester, MI, USA

Seller has asked to exclude his current personal vehicle from the sale. This vehicle shows on the balance sheet as an asset. Is this common? Any advice on how to account for it?

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Reply by a professional
from University of Michigan in Detroit, MI, USA

Hey Scott, from a deal mechanics standpoint--and assuming you are doing an asset purchase (it sounds like you are)--this is straightforward. That's the beauty of an asset purchase. You get to pick and choose what you're buying and leave seller with the rest. From a diligence standpoint, it is odd that the company owns seller's personal vehicle. Just make sure you diligence seller's tax returns thoroughly. Tax liability is one of those things that may follow you as a buyer, even if you are doing an asset deal. If seller is running his personal expenses through the business, it might give you pause for thought. Hope that helps.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

That is very common. If you are doing a stock purchase then he would need to be able to keep the vehicle post closing. If it is an asset purchase you just exclude that asset from the purchase. Typically the impact to the balance sheet should be very minor, especially if the vehicle has largely been depreciated off the books already. I hope this helps.

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