The Exit Toolkit · Sheet 8 of 20
Share sale vs asset sale
The biggest legal decision in your exit
Two ways to sell
A share sale transfers the company itself: the buyer takes everything, warts and all. An asset sale transfers only the individual assets the buyer picks: equipment, contracts, goodwill.
Share sale: clean exit
Liabilities go with the company. You do not need to wind anything up, and you are taxed once, personally, under Capital Gains Tax.
The tax gap
On a share sale, Business Asset Disposal Relief currently gives an 18% CGT rate on qualifying gains up to a £1m lifetime limit (24% above it). On an asset sale, the company pays corporation tax on its gains, and you pay tax again to extract the proceeds. Two layers instead of one.
Asset sale: the buyer cherry-picks
Buyers like asset deals because they leave liabilities behind. But every asset needs documentation, and contracts may need to be novated, meaning customers and suppliers must sign over to the new owner.
Employees and TUPE
On an asset sale of a going concern, TUPE usually applies: staff transfer automatically, with consultation obligations and employment warranties and indemnities to negotiate.
What's left behind
After an asset sale you may hold a shell company that needs a solvent winding up (Members' Voluntary Liquidation) to get the money out.
Bottom line
Buyers often prefer assets; sellers almost always prefer shares. This is negotiation point one, and it should be settled in the Heads of Terms, not discovered later. Take tax advice before you agree anything.
General information only, not legal advice. Steven Mather Solicitor is a trading name of Kesters Nook Limited; legal work is carried out through Nexa Law Limited, authorised and regulated by the SRA (number 633024).