Ashfords Solicitors - Sale or Acquisition of Shares in a Company

Sale or Acquisition of Shares in a Company

You can decide whether to buy or sell a company in one of two ways – buying or selling the assets or buying or selling the shares. If the business is owned by a company, you may have the choice of buying or selling the assets and goodwill (see below) or buying or selling the company itself by structuring the deal as a sale or purchase of the shares in the company.

A share purchase may be preferable to a buyer because as the company itself is being sold, the company contracts and leases will transfer to the buyer's ownership without needing to obtain third party consents, for example, consent of a landlord under a premises lease. The company may also have tax losses which the buyer wants to use to avoid paying tax on future profits and the rate of stamp duty on the purchase of shares is only 0.5%.

The buyer may want to consider carefully a share transaction because the buyer will buy the company with its historic liabilities. As a result, the buyer will need to conduct in-depth legal and accounting investigations into the company's affairs.