When it comes to selling a business, many owners are surprised to learn there’s more than one way to structure the deal. The two main routes,  a share sale and an asset sale, might sound like technical legal distinctions, but they can have a significant impact on your tax position, legal exposure, deal value, and post-sale obligations.

Understanding the differences early on helps you enter the process with clearer expectations and better negotiation leverage.

What Is a Share Sale?

A share sale involves the buyer purchasing all (or a majority) of the shares in a limited company. The business remains legally intact — the company continues to own all its assets, liabilities, contracts, and trading history. What changes is the ownership of the company itself.

For example, if you own 100% of ABC Ltd, and a buyer acquires your shares, they effectively take control of the entire business entity — lock, stock, and barrel.

What Is an Asset Sale?

In an asset sale, the buyer picks and chooses specific assets of the business: this might include the trading name, stock, equipment, customer contracts, intellectual property, or goodwill. Importantly, the legal entity itself remains with the seller.

So, if you operate as ABC Ltd, and sell the trading name and customer base to a buyer, you’re still left with ABC Ltd.  including any liabilities, historic obligations, or debts not explicitly assumed in the deal.

Why Does It Matter?

1. Tax Implications

For sellers, this is often the biggest consideration.

• In a share sale, the proceeds are usually subject to Capital Gains Tax (CGT).
• In an asset sale, the proceeds are taxed within the company,  potentially as corporation tax. To extract the funds personally, you may then face a second layer of tax, such as income tax or dividend tax.

For this reason, sellers usually prefer share sales, while buyers often favour asset deals for reasons outlined below.

2. Risk and Liability

• In a share sale, the buyer inherits all liabilities of the company,  including historic tax issues, contracts, litigation risk, and employee rights (under TUPE regulations). To mitigate this, they will often require warranties and indemnities from the seller.
• In an asset sale, the buyer starts with a clean slate. They acquire only the assets and obligations they specifically agree to take on. This is less risky from the buyer’s point of view.

3. Simplicity and Continuity

• A share sale often allows for a smoother handover. Contracts with customers, suppliers, and employees typically remain in place, as the legal entity continues unchanged.
• In an asset sale, contracts may need to be novated or renegotiated, especially if they’re non-transferable without consent. This can slow the deal down or increase execution risk.

So Which Is Better?

There’s no universal answer. The right structure depends on:

• The type of buyer (e.g. trade vs private equity)
• The business structure (limited company vs sole trader)
• The seller’s tax position
• Whether there are material liabilities or contract risks
• How much the buyer wants control vs protection

What matters is that you enter negotiations knowing the implications of each route. A good advisor will flag where a buyer is pushing for an asset deal and help you model the net proceeds,  after fees, taxes, and liabilities,  so you can compare offers like-for-like.

At Barnsgate Solutions we help business owners understand not just what their business is worth, but how different deal structures affect their take-home value and post-sale peace of mind. If you’re considering a sale, or weighing up an offer, we’d be happy to help you explore the best path forward.