Can I ask a seller to dissolve an unrelated subsidiary before I complete the purchase?
Yes, and this is a reasonable request where you're buying shares of a parent or holding company and don't want to inherit an unrelated subsidiary's own liabilities, governance, or ongoing obligations along with the business you actually want. Making proper dissolution of that subsidiary a condition of closing is a workable way to make sure you end up owning only what you intended.
The nuance is that dissolving a subsidiary properly isn't a quick formality — it generally requires winding up the subsidiary's own affairs first: settling its debts, dealing with any employees or contracts it holds, distributing or transferring its remaining assets, and completing the formal corporate dissolution filing, all before it can genuinely be considered gone. Treating this as something that can happen right before closing, rather than building real time into your timeline for it, is a common source of delay.
If this matters to your deal, raise it early enough that the seller has time to actually complete the wind-up rather than rushing it, and have a business lawyer confirm the dissolution is properly finalized, with the subsidiary's own creditors dealt with, before you rely on it as a completed condition.
Key takeaways
- Requiring an unrelated subsidiary's dissolution before closing is a reasonable, negotiable condition.
- Proper dissolution requires winding up debts, contracts, and assets before the corporation is truly gone.
- Treating dissolution as a last-minute step is a common source of closing delay.
- Confirm the dissolution is actually finalized, not just underway, before relying on it.