News & Views

Assets or Shares?

The Chancellor’s upbeat spring statement and predictions of the economy growing faster than expected, will hopefully provide some reassurance and optimism for UK businesses and investors.

As a business owner, you are no doubt constantly seeking to grow and invest in your business, whatever the economic conditions and political uncertainties, such as Brexit. One way of achieving this growth is by purchasing another business. Conversely, having grown and nourished your business, you may think that market conditions in your sector are right for capitalising on all your hard work and investment by selling.

Acquisitions can either be conducted whereby the sale and purchase of the underlying assets of an operational business are acquired, or by transfer of its shares. Whilst these methods both achieve the same commercial objective, the legal and tax consequences are different, require careful thought and specialist advice.

In a share acquisition, the buyer acquires the shares of the company and it is the ownership of the company (including all its assets and liabilities) that passes to the buyer.

In an asset acquisition, the buyer can select the assets from the business that it wants, leaving the majority of liabilities with the seller. An asset acquisition is often preferential to a buyer on the face of it, whilst a seller is more inclined to seek to sell its shares.

A buyer will want to ensure it acquires exactly what it wants for the best price; a seller will try to minimise its continuing obligations whilst striving to achieve the best price. The best price of course means the opposite to each of the parties.



  • Following the disposal of shares, the seller makes a ‘clean break’ from the business.
  • The buyer, however, will seek protections from the seller and make investigations about the company to ensure that it has a right of action against the seller should undisclosed problems arise.
  • A ‘clean break’ will only be achievable if the seller can negotiate releases in this respect.


  • In an asset sale, legal liability to third parties for debts and obligations remains with the seller.
  • Though a buyer might contract to assume responsibility for some liabilities, a third party is still able to take action against the seller.
  • The seller will also be liable for any unexpected liabilities which may occur further down the line.



  • All the assets of the company are acquired by the buyer. An asset purchase provides the buyer with the flexibility to choose the assets it wants.
  • Following the acquisition of shares, the buyer will benefit from the continuity of the business trading.


  • In an acquisition of assets, the liabilities carried over are identifiable in relation to the assets the buyer has decided to purchase.
  • Subject to statutory exceptions (employees and environmental matters) a buyer has the flexibility to decide which liabilities it agrees to take responsibility for, avoiding any unquantifiable or unknown liabilities.

A buyer and a seller will have opposing views about how best to proceed; what is an advantage to one of the parties will usually be a disadvantage to the other. The reality is that the acquisition method will ultimately hinge on the parties’ negotiating power.

This is just one element amongst many which need careful considerations prior to undertaking an acquisition or sale of your business. Buying and selling businesses are at the core of the Sherrards corporate/commercial practice and the team advise both public and private companies; understanding that commercial insight extends beyond the law in seeking to provide the best outcome in each and every transaction.

For more information please contact the corporate/ commercial team.

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