If you’re thinking about selling your business or acquiring one, chances are you’ve come across the terms asset sale and share sale. At a glance, they might sound like interchangeable ways of selling a business but they’re very different in both structure and consequence.
Knowing the difference isn’t just useful, it’s essential. The choice between an asset sale and a share sale can impact tax, liability, timing and, ultimately, how successful the transaction is for everyone involved.
In this article, we break down both routes, compare the pros and cons, and share some key insights from our experience advising on dozens of business sales and acquisitions across the UK and Ireland.
What is an asset sale?
In an asset sale, the buyer purchases specific assets of a business, not the business entity itself. This could include anything from physical assets like equipment, inventory and vehicles, to intangible assets like intellectual property, goodwill, and contracts.
The legal entity that owns the business remains with the seller. The buyer acquires the chosen assets and, in some cases, specific liabilities that are agreed as part of the deal.
This approach is often favoured in situations where the buyer wants control over what they’re taking on and more importantly, what they’re not.
Why choose an asset sale?
- More control: Buyers can handpick the assets they want to acquire and leave behind anything they consider risky or non-essential.
- Reduced liability: By not acquiring the entire company, buyers usually avoid inherited liabilities like debt, outstanding legal claims, or historic compliance issues.
- Tax relief: In some cases, buyers benefit from tax advantages, especially if the assets being acquired include depreciable items.
Drawbacks of an asset sale
- Complexity: Every asset has to be individually identified, valued and transferred. This can make asset sales more administratively heavy and time-consuming than share sales.
- Double taxation for sellers: In the case of a limited company, sellers may face corporation tax on the sale and personal tax when distributing proceeds to shareholders.
- Contract assignment challenges: Not all customer or supplier contracts can be easily transferred especially if they include non-assignment clauses.
What is a share sale?
A share sale involves the buyer purchasing the shares of the company and in doing so, taking over the entity itself, with all its assets, liabilities and trading history. The company continues to operate as it always has, just with a new owner at the helm.
This tends to be the preferred option for sellers and for buyers looking to take over an established, operating business with minimal disruption.
Why choose a share sale?
- Smoother transition: Staff, clients and suppliers often remain unaffected, which can help maintain operational continuity.
- Simplicity: The business changes hands through the transfer of shares rather than multiple individual assets which can make the legal process more straightforward.
- Tax efficiency for sellers: Sellers often benefit from tax reliefs, such as Business Asset Disposal Relief (formerly Entrepreneurs’ Relief), reducing capital gains tax on qualifying sales.
Drawbacks of a share sale
- Liability risk: The buyer inherits everything, including debts (unless otherwise agreed), ongoing disputes, tax issues or claims that haven’t yet surfaced. If there are skeletons in the closet, they come with the business.
- Need for rigorous due diligence: Because of the liabilities involved, buyers need comprehensive legal, financial and tax due diligence to avoid nasty surprises.
The key differences and how they play out in practice
| Feature | Asset Sale | Share Sale |
| What’s sold | Selected assets and (sometimes) liabilities | Entire business via shares |
| Company ownership | Remains with seller | Transfers to buyer |
| Control over liabilities | Buyer can avoid most liabilities | Buyer takes on all liabilities |
| Tax for seller | Potential double taxation | May benefit from tax reliefs |
| Complexity | Case by case dependant on volume and value and business structure | Case by case dependant on volume and value and business structure |
| Employee transfer | May trigger TUPE regulations | Automatically remain under same employer |
How do you decide which option is best?
There’s no one-size-fits-all answer here. The right structure depends on the goals of both parties, the sector, the complexity of the business and the appetite for risk.
As a seller, you might prefer a share sale for its tax efficiency and simpler handover.
As a buyer, you might lean towards an asset sale to minimise liability exposure or avoid inheriting legacy issues.
Ask yourself:
- Are we looking to sell the business entirely or just specific parts?
- Is there significant risk tied up in the company (for example, long-term liabilities or unresolved legal matters)?
- How will staff, customers, and suppliers be impacted by the structure of the deal?
- Are there contracts or licences that could complicate an asset transfer?
If you’re not sure which route is right for you, that’s when tailored legal advice becomes essential.
Our experience at Jamieson Law
At Jamieson Law, we advise clients on both asset and share sales, often in fast-moving, high-growth sectors like fintech, SaaS, e-commerce and creative industries. We help you:
- Understand the implications of each type of sale
- Navigate the due diligence process with confidence
- Negotiate fair, robust terms
- Avoid common legal pitfalls that can delay or derail a deal
We’ve helped founders complete successful exits and guided ambitious buyers through complex acquisitions; always with clear, commercially focused legal advice that reflects your goals.
Thinking about buying or selling a business?
We’re here to help you get it right.
Book a free discovery call with one of our commercial lawyers and let’s talk through your plans. Whether you’re preparing for a future sale or looking at an acquisition opportunity, we’ll help you understand your legal position and the best way forward.
Contact us today at 03308 184 218 or email info@jamiesonlaw.legal.
