Is it better to sell or buy the business or the shares?

The documentation required for the two different methods of asset transfer is different, though the legal costs for a buyer and seller are generally much the same in each case.

Every case should be considered individually – particularly from a taxation perspective – to determine the best means of acquisition or disposal. Apart from tax considerations, the benefits and detriments of buying the company rather than just its business are as follows:-


  • The buyer gets the benefit of government approvals or licences that are not transferable.
  • Leases and supply contracts don’t require formal assignment (although the buyer will still need approval from the landlord in the case of premises leases).


  • Latent liabilities and customer or supplier disputes are inherited even if they were unforeseen.

Because all of these features are difficult or impossible to independently investigate, many buyers are not prepared to entertain this means of acquisition. The capital gains tax and income tax payable on a share sale will be different to that payable on the sale of the business by itself.

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Last updated: 27 November 2019