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  • Jurgena Abdiu

Closing the Deal: Asset Purchase vs Share Purchase

In corporate law, there are two main ways to acquire a business: through an asset purchase or a share purchase. The method of acquisition can have significant legal and financial implications for the buyer and the seller. In this blog post, we will explore the key differences between an asset purchase and a share purchase transaction.

Asset Purchase

An asset purchase is a transaction in which the buyer acquires specific assets of a business, such as equipment, inventory, and real estate, but not the shares of the company that own those assets. This means that the buyer does not acquire ownership of the company itself, but only the assets they have chosen to purchase. The seller, on the other hand, retains ownership of the company and is free to continue operating the business or sell it to another buyer.

One of the main advantages of an asset purchase is that the buyer can cherry-pick the assets they want to acquire and can avoid taking on liabilities that they don't want to assume. Additionally, an asset purchase may be a good option for buyers who want to start a new business or expand an existing one, as they can acquire the assets they need without having to purchase the entire business.


Share Purchase

A share purchase, on the other hand, is a transaction in which the buyer acquires the shares of a company, thereby becoming the new owner of the business. This means that the buyer acquires all of the assets and liabilities of the business, including any legal disputes or outstanding debts.

A share purchase can provide the buyer with more control over the business, as they own the entire company and can make decisions about its future direction. However, a share purchase can also be riskier for the buyer, as they are taking on all of the liabilities of the business, including any legal disputes or outstanding debts.

In conclusion, whether to choose an asset purchase or a share purchase depends on the specific circumstances of the transaction, the buyer's goals, and the risks involved. It's important to seek the advice of a corporate lawyer to fully understand the implications of each method, and to ensure that the transaction is structured in a way that meets the buyer's needs.


If you need business law advice, download the free Arra Law Firm app in the App Store or Google Play or email us at reception@arralawfirm.com.


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