Sell your Business Series – Sale of Shares vs. Sale of Assets

March 23, 2021

Welcome to the fourth blog in our “Selling your business” series. This blog explores the differences between a sale of shares and a sale of assets.

When it comes to selling your business, the sale can be structured as either a “sale of shares” or a “sale of assets”.

 

A sale of shares involves the seller selling all the issued share capital in the business, in turn, transferring all the assets and liabilities to the buyer.  A sale of assets, on the other hand, involves the seller identifying a specific business unit, and then selling only the assets and liabilities attributable to that.

 

Sale of assets are often more complex transactions as they require the identification of the related assets and the coordination of the paperwork to transfer them on an individual basis. Where there are hundreds, or even thousands, of assets to identify, this can be tricky.

 

Sales of shares are a more common structure as they provide shareholders with a ‘cleaner’ exit. They are also more tax efficient. Not only are there various tax reliefs that can be realised upon the sale of shares, which do not apply when selling assets, but a sale of assets gives rise to the potential for the sellers to be taxed twice (once on any profit made by the business on the sale of the assets, and then again when the profits are distributed to the shareholders.

 

Ultimately, the structure of the sale will depend on a range of factors, and there are several fundamental tax and legal differences between both structures that can affect the final consideration received by the seller.

 

If you are thinking about selling your business and would like a call to discuss how we can help, please call us on 0203 924 5150, or email us at info@blueboxcfg.com.

Our next blog will discuss what we recommend having at the ready at the start of your process before you embark on approaching potential buyers.

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