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Selling a business: Shares or assets?

Selling a business can be expensive, complicated and time-consuming, and may also have significant tax implications, so you need to plan carefully and get the right advice at an early stage. In this series of briefings, we will explain the full process of how to sell your business.

Shares or assets?

Assuming the business is operated through a company, there are two ways for the buyer to acquire it: by buying the shares in the company from its shareholders, or by buying the assets of the business from the company. There are several differences between the two:

Assets and liabilities

In a share sale, the company passes to the buyer, including all its assets and liabilities, but in an asset sale the buyer may try to ‘cherry pick’ the assets it wants and leave all liabilities other than employees with the seller.

Form of transfer

Shares are transferred by a simple stock transfer form, whereas different assets require different forms of transfers. For example, property requires a conveyance or assignment, and customer contracts need to be assigned or novated.

Consents and approvals

On an asset sale, the assets have to be actually transferred to the buyer and this may require the consent of third parties. For example, customer contracts may not be transferable without the consent of the customer, and the transfer of a leasehold property will require the consent of the landlord.

Stamp duty

If the company owns a valuable property, the buyer may prefer to buy the company, as it will only have to pay stamp duty at 0.5% of the purchase price. Whereas if it buys the property, it will have to pay stamp duty land tax of up to 4% of the price of the property.


In a share sale, the company’s tax liability passes to the buyer, whereas on an asset sale the tax liabilities of the business normally remain with the seller. If the company has tax losses, the buyer may want to buy shares rather than assets, so it can set off the tax losses against profits in the buyer’s company.

For the seller, on a share sale the price is paid directly to the individual shareholders. On a sale of assets by a company the price is paid to the company and then, if the shareholders want to receive the money personally, the sale proceeds have to be transferred as a dividend from the company to the shareholders, which can only happen if the company has sufficient distributable reserves.

This may trigger a double tax charge, first for the selling company and secondly for its shareholders, which can make an asset sale very unattractive for the seller.

The choice for buyers and sellers

Generally speaking, for the reasons given above, sellers prefer to sell shares whereas buyers tend to prefer to buy assets. The choice will depend on the parties’ respective bargaining strengths and the nature of the business.

Click here to read the full briefing series: Selling a business.

For more information or guidance, please get in touch with:

Peter Coats
Partner and Head of M&A
T. 020 7227 7441


This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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