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Assets or Shares?

13th August, 2019

The structure of a business sale should be considered at the outset of any transaction.

Including whether there will be a sale of certain assets (with the assumption of certain liabilities) of the business as a going concern (asset sale) or whether the shares in the company operating the business will be sold (share sale).

Both structures are capable of achieving broadly the same commercial objective.  However, there are fundamental differences between the legal and tax treatment of the two.  The tax treatment is usually instrumental in driving the final transaction structure.  It is generally more advantageous from a tax perspective for a seller to structure a transaction as a share sale and for a buyer to structure as an asset sale.

From a commercial/legal perspective, the following should be considered:

 Asset Sale


  • can be used for unincorporated businesses such as sole traders, LLPs and partnerships;
  • degree of control over the transferring assets and liabilities (other than in respect of employees and environmental matters);
  • less need for extensive due diligence or warranty protection;
  • may only require the approval of directors of the selling company limiting shareholder involvement.


  • structural complexity – the sale document will need to identify what is to be transferred and deal with transfer formalities;
  • third party consents may be required due to a change of control of the assets and employees will need to be consulted;
  • certain liabilities cannot be excluded (e.g. employment liabilities);
  • for a limited company, the sale proceeds will need to be extracted from the company for the benefit of shareholders.

Share Sale


  • assets automatically transfer and legal entity holding the assets remains the same;
  • clean exit for sellers;
  • less likely to require third party consent and no requirement to inform and consult employees;
  • direct receipt of sale proceeds by shareholders;


  • more extensive due diligence and protection for a buyer as all liabilities of a company will be assumed;
  • shareholder approval will be required;
  • not possible for all entities.

The corporate & commercial team at Aaron & Partners are able to assist and advise you on how best to structure your transaction.

Charlotte Butler

Corporate & Commercial 

Senior Associate
Email: [email protected]
Tel: 01743 297 943

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