The investor’s field guide · S
Share purchase vs asset purchase
A share purchase transfers ownership of a company; an asset purchase transfers specified business assets and agreed liabilities.
Explained by the editorial team
In a share purchase, the buyer acquires shares in the company that owns the business. The company generally keeps its assets, contracts and liabilities. In an asset purchase, the buyer acquires specified assets and takes on agreed obligations, subject to applicable law.
Why it matters
Buying shares can preserve continuity, although contracts may contain change-of-control clauses. Buying assets lets the parties define the perimeter more directly, but contracts, licences and property may need separate transfers or consents. An asset purchase does not automatically leave every historical liability behind.
What to examine
Employees, tax, pensions, environmental obligations and other liabilities may receive special treatment under local law. UK employee-transfer rules, for example, can be relevant to a business transfer. The seller’s tax position and the buyer’s future deductions can also differ substantially between structures. Compare the complete legal and economic effect with qualified advisers. The lower headline price is not necessarily the lower total cost.
General information, not investment, legal or tax advice. Examples are illustrative. Read the disclaimer.