The following Tax guidance note provides comprehensive and up to date legal information covering:
The sale of a company's business can be structured as either:
a sale of assets owned by the company (an asset sale), or
a sale of shares in the company by its shareholders (a share sale)
In an asset sale, a buyer (or, as the case may be, seller) is able to pick and choose which assets and liabilities and which parts of the target business it acquires (or, in the case of the seller, sells).
In a share sale, ownership of the company owning and operating the target business itself is transferred to the buyer. The company retains its assets (and liabilities) and continues to operate the business under the buyer's ownership.
A buyer will generally prefer an asset purchase in order to avoid acquiring any unexpected and potentially unquantifiable liabilities of the company. A seller will usually prefer to sell shares of a company, giving it a clean break from the company and its business.
Although it is ultimately a commercial decision, whether the transaction is structured as an asset or share sale depends on many factors including:
the relative bargaining position of the parties
the nature of the assets used in the target business
the presence of any difficulties in transferring the assets including obtaining consent for the assignment of key contracts or leasehold properties
the existence (or risk) of outstanding historical
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