April 22, 2025
Whether you’re looking forward to retirement, your next venture or simply cashing in on years of hard work, protecting your assets during and after the sale of your business is critical. Yet, many business owners overlook this essential aspect of exit planning—leaving themselves vulnerable to legal risks, tax pitfalls, and financial loss.
If you’re a business owner in the U.S. or Canada preparing for a sale, here are the key asset protection strategies you need to have in place …
Before you even list your business for sale, take a close look at how your assets are structured. Many business owners commingle personal and business assets over time—vehicles, properties, and even intellectual property. Separating them not only simplifies the due diligence process but also shields your personal wealth from post-sale liabilities.
Pro Tip: Work with your M&A advisor, financial advisor and legal team to clearly delineate what belongs to the business and what belongs to you personally.
If your business operates as a sole proprietorship or general partnership, your personal assets could be exposed to business-related claims—even after the sale. Converting to a more protective structure such as an LLC or corporation before the sale may limit personal liability and offer long-term protection.
In Canada, a Holding Company structure can also provide an extra layer of defense, helping to isolate proceeds from potential claims or taxes.
Once the sale goes through, the money you receive becomes a new target for creditors, lawsuits, and taxes. Many business sellers proactively move proceeds into a trust, family limited partnership, or holding company to shield these funds and improve tax efficiency.
In the U.S.: Consider setting up an irrevocable trust or using estate planning vehicles to protect and pass down wealth.
In Canada: Talk to your M&A advisor about a capital gains exemption strategy, which can help shield up to $1 million in proceeds when selling qualifying small business shares.
Most buyers will ask for reps and warranties—essentially guarantees about the state of your business. These clauses can open the door to future liability if not carefully limited in scope and time. Bottom line: the purchase agreement can be a legal minefield if you don’t have the right M&A advisors guiding you through the deal!
Asset Protection Tip: Ensure your M&A/legal advisor negotiates limits on indemnities, timeframes for claims, and the use of escrow or holdback funds to cap your risk.
Even after the sale, former owners can be pulled into lawsuits. Directors and Officers (D&O) insurance and tail coverage (also called “runoff” insurance) can cover post-sale legal costs, especially if you’re staying on during a transition period or as a consultant.
This is especially important for industries with higher risk profiles or extended liability periods (like manufacturing, food, or healthcare). An experienced M&A advisor will know all this and, along with the legal experts on their team, they will factor your legal protection pre- and post-sale into the deal.
One of the most overlooked threats to your sale proceeds? Taxes! Capital gains tax, state/provincial taxes, and estate taxes can eat into your windfall fast, so it’s important you work with M&A advisors who have specialized tax practitioners on their team to ensure you minimize your tax liability.
Asset protection isn’t a one-size-fits-all plan. The best approach combines legal, tax, financial and wealth management expertise tailored to your situation. An experienced M&A firm that provides legal, tax and financial expertise, like Woodbridge does in partnership with its parent company Mariner Wealth Advisors, will ensure that you:
Selling your business is a milestone—but it’s also a moment of financial vulnerability. The right asset protection strategies can mean the difference between walking away with peace of mind or potentially dealing with costly surprises down the road.
Before you sign the dotted line, make sure your assets—and your future—are secure.
Ready to Sell with Confidence? Connect with Woodbridge’s M&A experts to build a customized exit plan that protects what matters most—your legacy.