This is a quick answer to a frequently asked question from ALF sellers.
“When I close on my sale, does the buyer keep the cash in my business bank account?”
While many assisted living facilities are owned and operated by individuals or small businesses, most are held in business entities for legal and tax purposes, usually as a limited liability company or a corporation.
When the facility is sold, buyers have a choice to (1) purchase your business entity, which includes the facility, or they can just (2) purchase specific assets owned by your business entity. In nearly every case, buyers insist on purchasing only the assets of your business and not the business entity because purchasing the entity would involved them also receiving all of your business’s liabilities – that can be messy for them.
In an asset purchase, the contract will specifically list all of the assets that are included. In most contracts that I’ve seen, cash is never included or it is specifically excluded, often with other assets that the seller will keep.
So to answer the question about whether the buyer keeps the cash: no, they normally never keep the cash.
I’m not an attorney and this information is not intended to offer legal advice. Always consult your own attorney about your specific situation.