Buying a business – shares or assets?

Last Updated: January 3rd, 2023

The buying and selling of businesses, whether shares or assets is a core specialism at Gannons. If you are buying or selling a business or parts of a business, we’d love to talk to you. Our fees are highly competitive.

Many of our clients are buying or selling at values between £500,000.00 and £10 million. Paying fees of magic circle fees generally makes no sense when you can get the same level of specialist expertise and experience from niche firms like Gannons.

Share sale vs asset sale – comparison and differences

There are two methods to sell a business to new owners: a share transfer or an asset transfer.  Some key differences are:

Share purchase

Asset purchase

What happens?  The selling company’s shares are sold and control of the company passes from seller to buyer.  

The buyer and seller agree which assets and or liabilities will transfer.  The other assets or liabilities remain with the seller. This is known as “cherry picking”.


What happens to the business liabilities after sale?





All known and unknown liabilities transfer.  Share transfers may not be attractive if unknown liabilities exist and nothing protects the buyer or seller.Usually a disclosure exercise i.e. investigations before transfer, highlight potential liabilities.  Indemnities and warranties then limit and cap liabilities which the buyer inherits.






Only the assets and liabilities expressly agreed to be transferred are transferred to the buyer and those not transferred remain with the seller.This is usually done by differentiating between the ‘included’ and ‘excluded’ assets and liabilities in the asset transfer contract.  Sometimes this may appeal to the buyer as it allows for certain liabilities to be left with the selling company.

It is possible to transfer rights to intellectual property, domains and brand names to enable the buyer to trade under the name of the seller (if commercially attractive).



How does the transfer work?



Shares in the selling company transfer to the buyers. The buyer can be a corporate entity or an individual sole trader.



Each asset or liability that is to be transferred to the buyer must be done separately by the seller either by way of assignment, novation or delivery.


Is Stamp Duty payable?  

Stamp duty is payable by the buyers 0.5% – but if a transfer is intragroup it is usually exempt.


Certain assets such as land may attract stamp duty.  Most other assets are exempt from stamp duty.

Is  VAT payable?  No.  

VAT is not chargeable if the transfer qualifies as a ‘transfer of a business as a going concern’.  Therefore in many cases VAT is not payable.

Is Capital Gains Tax (“CGT”) payable?



Yes – CGT is payable on the gain arising on the sale of shares.Where there is deferred consideration or the sale price is determined by reference to an earn-out special tax rules apply which we can advise on.



Yes – CGT is payable on the gain arising on the sale of certain assets.However, there are hold over reliefs to CGT reliefs available in some cases.   Specialist review of the tax position is required which we can assist with



What happens to employees?





As the shares of the selling company are sold the employees contractual relationship with the selling company remains. TUPE does not apply. However, employment issues emerge if the new owner “harmonises” employment contracts or reduces the work force.



Employees are transferred automatically under the Transfer of Undertakings (Protection of Employment) Regulations 2006. TUPE protects employees rights. Changing terms and conditions post-transfer is difficult but not impossible.

TUPE sets down rules and timescales for employee consultation about the transfer.


What legal documents are needed?








Share purchase agreement;

Stock transfer forms;

Details of disclosures made (the disclosure letter);

Transitional services agreement if facilities are to be shared;

Specific agreements required for the transfer.

Often the selling company’s directors resign office upon completion.



Asset purchase agreement;

Confirmation of compliance with TUPE,

Third party consents required for the transfer of agreements, e.g.

Landlord consent;

Supplier consent;

Transitional services agreement;

Specific agreements required for the transfer.



If your business is a partnership or LLP the issues are slightly different.

If you need lawyers for buying or selling a business or the assets of a business, we provide a highly experienced, practical and affordable option. Please do call or email us for an initial discussion.

Catherine Gannon

Catherine is an extremely experienced solicitor, having been qualified since 2000, and deals with all types of corporate and commercial matters and advice and also tax law.

Catherine is well known for turning complex problems into solutions, priding herself on always finding a way. In her spare time she runs Gannons!

Let us take it from here

Call us on 020 7438 1060 or complete the form and one of our team will be in touch.