Choosing the Right Business Sale Structure: Asset Sale vs. Share Sale

• Posted onFebruary 3, 2025

When you are planning selling your business, you will need to consider how the business sale is structured.

There are two different business sale structures you can chose from- a share sale and an asset sale. While the purpose behind each of them is to sell a business, they both have very different processes, aims and outcomes. Alex Robinson, a trainee in our Corporate & Commercial Department guides you through the key differences between the two structures.

What is an asset sale? 

A business is an umbrella term and encompasses many different parts such as the name, assets, building, machinery, staff, liabilities and so on. With an asset sale, the seller and the buyer can agree on which parts of the business are to be sold. They can mix and match in order to suit their wants and needs.

What is a share sale?

In a share sale, instead of the buyer and the seller being able to agree on which parts of the business are sold, the whole business will be sold. The buyer will acquire the shares in the company and will own the company and the company will own everything else.

What are the differences between an asset sale and a share sale?

The Seller

• In an asset sale, the company will be the seller.
• In a share sale, the seller will be the shareholder(s) that own the shares.

Tax implications

• In an asset sale, the proceeds of the sale will go to the company firstly and then will need to be extracted from the company. This could result in a ‘double tax’ charge and highlights the importance of having a competent solicitor.

• In a share sale, the sale proceeds will be paid directly to the company shareholder(s). This may result in lower tax liabilities and may allow for eligibility for Business Asset Disposal Relief.

Employee considerations

• In asset sales, the issue of employees is more complicated. If the employees form part of the deal and the business is sold as a going concern, both the buyer and seller must adhere to TUPE. Any dismissals made because of this are likely to give rise to unfair dismissal and risk employment tribunal claims.
• In a share sale, the employees will remain contracted to the company. There is effectively no transfer, and they will still be employed under the same terms.

If you’d like to learn more about asset sales vs. share sales, click here.

How WSP Solicitors can help.

When selling a business, it is crucial to consult a good solicitor. A solicitor will be able to help you decide on the structure that is right for you and advise you on the process. They will help you sell the business in the most tax efficient manner, avoid any employment tribunal claims and ensure the process runs smoothly.

It is also advisable to start planning a couple of years in advance so you can get the best deal for yourself with the most efficient tax liability. If you are considering selling your business in the next few years, please get in touch with our commercial team and we can get the ball rolling.

For further information on the nuances of selling a business, please consult our business guide for a complete summary of the process and what you need to consider.

Download your free guide to selling your business here.

If you would like to speak to a member of the team you can contact us in a variety of ways. You can call us on 01453 847200, you c an fill out the contact form on this page and someone will get back in touch with you or you can emails us directly using contact@wspsolicitors.com—our team is here to help you navigate the sale of your business with confidence.