Asset sale compared with share sale
The legal structure changes tax, liability, contracts, licences and what exactly the buyer owns after closing.
Asset sale
In an asset sale, the buyer acquires selected assets and the trading business as agreed. This can reduce exposure to historic company liabilities, but contracts, leases and licences must be transferred or replaced.
Share sale
In a share sale, the buyer acquires the company itself. Contracts may remain in place, but the buyer also inherits company history, tax records, claims and hidden liabilities.
VAT and tax
A going concern asset sale can be VAT zero rated when legal requirements are met. Share sales and asset sales have different tax outcomes, so get tax advice before signing.
Due diligence focus
Asset deals focus on what transfers and what must be assigned. Share deals require deeper review of company history, tax, litigation, debt and every contract.
Choosing structure
There is no universal best option. The right structure depends on contracts, licences, tax, funding and risk allocation.
Next step
Discuss structure with your attorney before making a binding offer.
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This guide is general information, not legal, tax, accounting, finance or investment advice.