Asset sale vs share sale

The two legal shapes of a business sale: buying the assets (equipment, brand, goodwill) out of the company, or buying the company itself, shares, history, and liabilities included.

In an asset sale the buyer purchases the pieces (equipment, stock, brand, customer list, goodwill) and leaves the legal entity, with its history and liabilities, behind with the seller. In a share sale the buyer takes the company whole, warts and all.

Buyers of small businesses usually prefer asset sales, precisely because unknown liabilities stay behind. Sellers often prefer share sales for tax and cleanliness reasons that vary by country, which is why this is one decision where paid professional advice earns its fee.

The practical seller takeaway: contracts, licences, and the lease may need to TRANSFER in an asset sale rather than simply coming along, which makes transferability checks even more important to run early.