When selling a hotel, there are two main ways to structure the sale: as an asset deal or a share deal.
An asset deal involves selling individual assets of the hotel, such as the physical property, furniture, fixtures, equipment, and goodwill. In an asset deal, the seller retains ownership of the legal entity that owns the hotel, such as a limited liability company (LLC) or corporation, and the buyer purchases only the identified assets of the hotel. The buyer typically creates a new legal entity to own and operate the hotel after the sale. This type of sale is common when the buyer wants to acquire specific assets or if the seller wants to retain ownership of the legal entity or some of the assets.
A share deal, on the other hand, involves selling the entire legal entity that owns the hotel, such as a corporation or LLC, including all its assets, liabilities, and obligations. In a share deal, the buyer becomes the owner of the legal entity that owns the hotel, and all its assets and liabilities transfer to the new owner. This type of sale is common when the buyer wants to acquire the entire hotel, including its legal entity, business licenses, permits, and contracts, without creating a new legal entity.
There are advantages and disadvantages to both asset and share deals, and the choice of which type of deal to pursue depends on the specific circumstances of the sale. It’s important to work with a hotel broker or advisor who can help you evaluate your options and structure the sale in a way that meets your needs and goals.