Share Sales and Business/Asset Sales
Selling a company can be structured as a share sale or as a sale of the business and its assets. The two routes look similar commercially, but they allocate risk, liabilities and tax outcomes differently, so the paperwork (and the deal timetable) tends to differ as well.
In broad terms:
- A share sale is where the buyer acquires the shares in the company.
- A business/asset sale is where the buyer acquires specified assets (and only such liabilities as are expressly assumed).
The choice between a share sale and a business/asset sale is a key commercial decision. It is usually driven by legal, tax and financial considerations such as price, risk, ease of completion and how profits will be taxed. Independent legal, tax and financial advice should be taken before committing to a structure.
How Does a Share Sale Work?
In a share sale, the buyer acquires the shares from the existing shareholders. The company itself continues to own its assets and remain responsible for its liabilities. In practical terms:
- The buyer takes on the company with all its assets, contracts, employees and liabilities (known and unknown).
- The business can typically continue on a “business as usual” basis, because the legal entity does not change.
Useful where the buyer wants continuity of contracts, employees and trading history.
How Does a Business/Asset Sale Work?
In a business/asset sale, the buyer acquires some or all of the assets that make up the business. These may include:
- Tangible assets, such as property, land, machinery and stock.
- Intangible assets, such as intellectual property and goodwill.
The assets being sold must be specifically identified, and liabilities will only transfer if the contract states that they do. Separate arrangements are often required for contracts, employees and property.
Useful where the buyer wants to “pick and choose” which assets and liabilities to take on.
When Should You Use These Templates?
✅ You are selling all or part of the shares in a private company.
✅ You are buying shares from existing shareholders in a private company.
✅ You are selling a business (or part of a business) by transferring its assets.
✅ You need supporting paperwork for a share sale or business/asset sale, such as confidentiality terms, due diligence enquiries, board approvals, completion checklists and signing authorities.
Use of these templates does not remove the need for tailored legal and tax advice on the specific transaction.
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Frequently Asked Questions
What is the real difference between selling the shares and selling the business and assets? +
Who ends up holding the history. In a share sale the buyer acquires the company itself, with every asset, contract, employee and liability inside it, known or not. In an asset sale the company stays with its owners and the buyer picks up specified assets, taking only the liabilities it expressly assumes. Same business changing hands, completely different risk allocation, which is why the documents and timetables differ. Each route has its own agreement and supporting collections in this group.
Which structure should we choose for our sale? +
There is a classic starting tension: sellers usually prefer a share sale, a clean break with the company's liabilities going with it, while buyers often prefer an asset sale, taking the good and leaving the rest. Tax frequently decides it, the two routes are taxed differently for both sides, and practicalities matter too, such as contracts that would need third party consent to move. Take legal, tax and financial advice before committing; the structure drives everything after it.
What happens to the employees under each route? +
It flips completely. In a share sale nothing changes for employees: their employer is the company and the company continues, so TUPE does not apply. In a business or asset sale the employer changes, so TUPE applies: employees assigned to the business transfer automatically on their existing terms, you cannot pick and choose who moves, and both sides must inform and, where measures are envisaged, consult affected staff. Get employment advice early on an asset sale; TUPE failures are expensive.
What paperwork does each route actually involve? +
A share sale runs on a share purchase agreement plus supporting documents: heads of terms, due diligence enquiries, disclosure letter, board minutes, stock transfer forms and completion items. An asset sale runs on a business purchase agreement plus its own supports: confidentiality terms, heads of terms, contract assignments or novations, and completion documents. The two agreement collections and their matching supporting collections make up the four sub-folders of this group.
We have agreed a price with a buyer. What is the sensible order of events from here? +
Confidentiality terms first, before information changes hands. Then heads of terms recording the deal shape, mostly non-binding but clarifying. Then the buyer's due diligence, your answers feeding the disclosure exercise. Then negotiation of the main agreement, completion preparations against a checklist and completion itself: payment, transfers, board approvals and filings. Skipping steps to save time usually costs more later. The supporting collections provide the documents for each stage.
