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Buying & Selling A Business: Share Or Asset Sale by Limited Companies? 10 May 2021

If you're buying or selling a business, you'll want to achieve the maximum value possible from the process - and  a key issue is whether it is better to buy or sell the shares or assets of a company.

Each company purchase or sale is unique and requires a different solution, depending on the busines structure as well as desired outcome of the owner and stakeholders. It is important that negotiations are handled professionally from the start, communications are clear between and to everyone involved in the deal, and that costs stay within budget during the process.

Shares Or Assets For The Business Purchase Or Sale?

A key issue when you're buying or selling a business, is whether you'll be buying or selling the shares or the assets of the company.

Shares

You could buy or sell the shares of the company if you're buying or selling the whole company rather than part of it.

If selling your business, selling the shares means:

  • Cutting ties to the company, including any liabilities such as legal claims or debts unless Personal Guarantees  have been given - these will need to be released or covered by an indemnity
  • Getting the purchase price directly.  This may well be more beneficial  tax wise - there would be no need to extract this from the Company

If buying a business, a share sale means:

  • Taking on the liabilities of the company
  • Legal due diligence to establish what liabilities/problems there are will be important
  • It is key to negotiate warranties and indemnities to ensure there are no hidden liabilities or costs of the business

Assets

You could buy or sell the assets of the company if you're only buying or selling part of the business rather than the whole business.

If selling your business, an asset sale means:

  • Taking the current liabilities with you unless this is agreed otherwise
  • It is the company which will receive the purchase price rather than you or shareholders

If buying a business, an asset sale means:

  • The seller takes the liabilities that exist currently with them unless you agree to take them on as part of the purchase

Helping You With Your Share Or Asset Sale   

Straightforward, professional advice is key to achieve a successful business purchase or sale. Our  solicitors have experience of handling a range of commercial transactions and will understand and advise on what is the best solution for you and your business and will ensure a good line of communication with your Accountants.

From the initial advice during the negotiations through to completion, we will assist you at every step of the way - and identify any possible issues too, to ensure a smooth process.

To speak to one of our specialist solicitors about buying or selling a business, please contact us at our Chorlton office on 0161 860 7123 or at our Failsworth office on 0161 681 4005 or email chorlton@hlfberry.com