Comparison of share sale and trade and asset sale

By Tolley
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The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Comparison of share sale and trade and asset sale
  • Comparison of share sale and trade and asset sale

Comparison of share sale and trade and asset sale

A purchasing company can acquire a business in one of two ways. It can be done by way of:

  • a sale of shares, or
  • a trade and asset sale

The preferred option for vendors is often a share sale because it is likely to be beneficial from a tax point of view, particularly when entrepreneur’s relief is available.

Commercially, purchasers may prefer to buy the trade and assets. This is because a company’s ‘history’ is transferred along with the shares to the new owner. Due diligence aims to identify potential liabilities and obligations and make recommendations as to how to deal with them (eg price adjustment, underpinned by structure change).

More on Selling the company: