A Tampa buyer called me two weeks after closing on a roll-up acquisition of a regional services business. The deal had been structured as an asset purchase, papered over forty days, with a clean carve-out of pre-closing liabilities. The seller’s two principals had rolled twenty percent of the proceeds into preferred units of the buyer’s new holding company and had stayed on as employees. The buyer had paid cash for the rest, kept the brand, kept the customer list, kept the same office, and rehired all but three of the seller’s employees.
The call was about a complaint that had landed that morning. A former customer, asserting a 2024 product-liability claim against the seller, had named the buyer as a co-defendant on a single theory — that the buyer was the mere continuation of the seller and therefore liable for the seller’s pre-closing torts. The deal had been structured to push that exact risk back onto the seller. The complaint did not appear to care.
The buyer wanted to know whether the case had any teeth. The answer, under Florida law as it has developed over the last forty years, is that it has more teeth than most asset-deal lawyers treat it as having. The mere-continuation exception is one of the most under-respected lines in Florida M&A practice, and the standard buyer’s-side drafting in 2026 still treats it as a footnote when it should be treated as a structural concern.
The general rule, and the four ways out of it
Florida starts with the same general rule most jurisdictions apply: a purchaser of assets does not assume the seller’s liabilities. That is the headline reason transactions get structured as asset deals in the first place. The buyer takes the assets; the seller keeps the liabilities; the seller dissolves or winds down; the buyer moves on.
The rule has four exceptions, set out by the Florida Supreme Court in Bernard v. Kee Manufacturing Co. in 1982 and applied with surprising consistency since. The buyer assumes liabilities when it has expressly agreed to do so; when the transaction is in substance a de facto merger; when the buyer is a mere continuation of the seller; or when the transaction is a fraudulent attempt to escape liability. The first and the fourth are usually clean — the contract either does or does not expressly assume, and a fraudulent-transfer claim has its own elements. The middle two are the ones that move the goalposts.
The de facto merger doctrine asks whether the transaction was, in substance, a merger even though it was papered as an asset deal. The factors are familiar — continuity of ownership, continuity of business, continuity of management, prompt dissolution of the seller, assumption of obligations necessary for uninterrupted business — and most asset-deal practitioners know how to avoid them in the abstract. The mere-continuation doctrine, in contrast, gets less attention, and is where the asymmetry lives.
Mere continuation is broader than “same shareholders, same business”
The conventional shorthand for mere continuation is that the buyer is the “same” entity as the seller — same shareholders, same officers, same business. The shorthand is correct as a sufficient condition. It is wrong as a necessary one. Florida appellate decisions have, in different cases, emphasized different facets of the doctrine, and the line is more porous than most asset-deal lawyers treat it as.
The cleanest articulation of the doctrine treats it as a continuity-of-corporate-entity test. The question is whether the buyer is essentially the same legal person, dressed in a different name. A perfect overlap of ownership is the strongest evidence of that, but not the only evidence. Continuity of management, continuity of identity in the market, continuity of physical location, continuity of the customer base, and prompt dissolution of the seller can each push the analysis in the direction of mere continuation even when ownership is not identical.
The District Courts of Appeal have not been uniform on how much weight to give common ownership specifically. Some opinions treat it as essentially dispositive — without common ownership, no mere continuation. Others have applied a broader continuity-of-enterprise framing that survives partial overlap of ownership through rollover equity. The 2024 and 2025 vintage of Florida appellate work has, on the cases I have read, leaned toward the broader framing, and the practical lesson is that a buyer cannot rely on the strict common-ownership reading to insulate it from the doctrine.
That matters more in 2026 than it did ten years ago, because rollover equity has become a routine feature of mid-market acquisitions. Private-equity sponsors and strategic acquirers regularly require seller principals to roll a portion of proceeds into the buyer entity, both for alignment reasons and to fund a portion of the consideration. The transaction structure that the dealmakers think of as “clean” — asset purchase, seller dissolves, principals roll twenty percent and stay on — is precisely the structure that hands a plaintiff the continuity facts the mere-continuation doctrine asks about.
Florida’s general assignment rule on dissolution makes it worse
The trap deepens when the seller dissolves promptly post-closing. Florida’s corporate dissolution statutes, found in Chapter 607 and the effect-of-merger provisions on the Florida Legislature’s statutes site, give creditors of the dissolved entity a defined window to make claims. The asset buyer’s intuition is that the dissolution accelerates the wind-down and reduces the period of exposure. In product-liability and tort cases, where the underlying injury has not yet been discovered, dissolution can have the opposite effect — it leaves the plaintiff with no defendant to sue except the buyer, and the absence of an alternative defendant has historically pushed Florida courts toward applying mere-continuation more generously.
The 2021 wave of opioid litigation made this point with some force, although the doctrinal reasoning was mostly worked through in other jurisdictions. The pattern was the same: asset buyer keeps the operating business, seller wound down, plaintiff sues the buyer because the seller is gone, court finds enough continuity to let the case proceed. Florida courts have not faced the question on opioid facts directly, but the doctrinal posture is the same as it has been since Bernard, and a sophisticated buyer should expect Florida courts to apply the doctrine consistently.
The drafting choices that actually move the analysis
The buyer’s drafting move is not to layer more “no successor liability” language into the asset purchase agreement. Those clauses do real work as between the buyer and the seller — they support contractual indemnification — but they have no effect on a third-party plaintiff’s mere-continuation claim. The plaintiff is not a party to the agreement, and the buyer’s representation that it is not assuming the seller’s liabilities does not bind a tort claimant.
The moves that actually shift the analysis are structural, not contractual.
First, the rollover should be papered through a holding-company structure that is plainly separate from the operating buyer. The seller’s principals receive equity in HoldCo, not in OpCo, and HoldCo is the entity that owns OpCo. The continuity-of-ownership argument gets more strained when the equity the seller’s principals receive is one corporate layer up from the entity that actually holds the assets. This is not a magic shield, but it is the kind of structural separation that Florida courts have, in the cases I have read, treated as relevant.
Second, the seller should not dissolve immediately. The temptation is to wind down quickly to get the seller’s tax-year housekeeping done. The better practice, for any business with meaningful product-liability or environmental exposure, is to keep the seller in existence as a runoff entity for a period — three years is a common choice, matching the typical statute-of-limitations window for the most common tort claims. The seller retains assets, retains insurance, retains a registered agent, and remains a defendant a plaintiff can sue. That dramatically weakens the mere-continuation theory, because the doctrine’s force comes largely from the plaintiff’s lack of an alternative.
Third, the buyer should require tail insurance on the seller’s product-liability and general-liability policies, written for the same three-year runoff period. The cost is modest. The protection is structural: the seller has the financial capacity to defend claims, the plaintiff has a defendant with deep pockets, and the buyer’s continuity argument gets stronger. The M&A structuring choices that protect a Florida buyer from these claims are mostly in the runoff period, not in the closing-date documents.
Fourth, the buyer should keep operational separation visible. The same office is hard to avoid, but the company name, the marketing, the customer-facing language, the website domain, and the contracts going forward should all signal the new entity. A buyer that signs new customer contracts in the OpCo name, on OpCo letterhead, with new account numbers and new payment instructions, is doing the work of distinguishing itself from the seller in a way that matters when a court is later asked whether the buyer is the “continuation” of the seller. The corporate-governance separation between HoldCo and OpCo should be reflected in board minutes that are kept separately, with independent operational decisions documented at OpCo’s level.
What the standard form misses
The standard Florida asset-purchase agreement I see come across my desk treats successor liability as a closing-deliverable issue — a non-assumption certificate, a disclaimer in the closing flow of funds, an indemnification basket. None of those move the doctrinal analysis when a third-party plaintiff is the one making the claim. The protection is in the structure of the deal and the post-closing operational discipline, not in the recitals.
For a Florida buyer doing a roll-up where principals are rolling equity, the right diagnostic is to assume mere continuation is on the table and to design around it. For a Florida seller, the inverse is true: a seller with potential tail liabilities should be candid about them, should not push for immediate dissolution, and should price the deal to reflect that some of the buyer’s protection is buying runoff capacity rather than indemnification.
The doctrinal contours are old. The deal structures generating the continuity facts are new. The gap between them is where Florida plaintiffs have been winning cases that the buyer’s transaction documents were drafted to prevent.
If you are a Florida buyer or seller working through an asset deal and trying to think through the successor-liability exposure on either side, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
— John
