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Should I sell the assets or shares?

If you are planning to sell your business and are a sole trader or a partnership then of course your choice is narrowed to one – an asset sale. However, if you run your business through a limited company or a limited liability partnership, then your first sale decision is the choice about whether to sell the assets of the company or your shares in the company.

The business sale agreement; there are advantages and disadvantages to both business sale options and you need to know the difference when preparing to sell your business:

Asset Sale Agreement

Advantages

  • An asset purchase generally involves your buyer in fewer risks and therefore the contract and transaction are more straightforward and less involved.
  • The seller is your company and so, unless there is an express arrangement to the contrary, any warranties or guarantees you give are given by your company, not you personally.

Disadvantages

  • The buyer is a completely separate legal entity so you will have to ensure that all the different parts of the business are legally transferred including any properties, employees or contracts. This makes it harder to keep the deal quiet!
  • The company will still be yours at the end of the transaction and you will need to deal with this properly (e.g. by closing the company down) which could involve you in further work such as chasing unpaid debts owed.

Share Sale Agreement

Advantages

  • The buyer will step into your shoes as shareholder/director but the employees, contracts, properties etc will remain in the company’s ownership. There is therefore no need for the assets of the company to be transferred and this means a share sale can often be completed without any third party involvement making it far more discreet.
  • The company will no longer be yours at the end of the transaction and so your buyer will inherit any problems (such as outstanding debts) that exist at the date of sale.

Disadvantages

  • A share purchase generally involves your buyer in far greater risk than an asset purchase and therefore the contract and transaction are more involved and more warranties (including warranties relating to the payment of tax) will be requested.
  • You, not your company, are the seller and so any warranties or guarantees you give are given by you personally.

Finding a buyer for your business – Confidentiality Agreements

If the information you are set to disclose is sensitive, consider asking the buyer to enter into a confidentiality agreement. This is something that we would always seek to negotiate at the outset on your behalf as it could prove difficult to do once the process has begun.

Download our Guide to Selling your Business here.

Rebecca Beswick

How Can Lawson West Help You?

Starting and growing a business takes real dedication. Our knowledgeable Corporate Commercial team works seamlessly alongside business owners, directors, sole traders and entrepreneurs to realise their business ambitions.

From initial partnership or shareholder agreements to company acquisition or disposal, we support every transaction along the way. You can rely on our dependable experience of what not to do and likely obstacles along the way, to determine the best course of action. We know the pitfalls and delays that could jeopardise your aspirations and we have strong relationships with finance and accounting professionals to support your transaction or deal to achieve the best outcome.

Our dependable team has a talent for understanding your needs and we look forward to helping you.

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Testimonials from Selling A Business

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Our Core Values are Welcoming, Confident, Supportive, Knowledgeable and Dependable and we aim for clients to have a positive experience with Lawson West Solicitors.

Evidence of our great client service can be seen in the reviews and testimonials we regularly receive. We are always pleased to receive great reviews because it means our clients are happy with the service we provide, and it shows that we deliver on our core values, we don’t just talk about them. We really welcome client feedback and hope you enjoy reading some of the latest testimonials throughout this website.

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A 5-star Google business review for members of the Lawson West Commercial and Commercial Property teams: ""I have used Lawson West professionally on many occasions for property and related dispute resolution matters, and been very happy with their support which has always been prompt, knowledgeable and attentive. I recently instructed them to assist me in the sale of my business. I was once again very happy with their services which I found to be insightful, knowledgeable and clearly presented throughout.""

Mr E K, Commercial Client, Leicestershire

Rebecca Beswick, Solicitor & Head of Commercial Property Lawson West Solicitors, Leicester “A friend of mine had a really good experience with Rebecca Beswick, who he has been dealing with for many years. Rebecca helped him sell his business successfully. She was quick prompt and very understanding. Could not recommend her enough, not many solicitors out there that do their job properly and quickly so I definitely recommend them for anyone. She might not only be the best in the business but probably the best in the city too.”

Rui Silva, a Google web review

Always able to speak with the solicitor promptly.

Mrs M

The detail has to be right and we ultimately need protection post sale. You achieved that.

Mr & Mrs H

I’ve been singing your praises over our business sale and I’m glad we employed you to look after our interests. The content of the Sale Agreement enabled us to get the conclusion we needed and we know it protects our interests.

Mr H

Good advice which made me feel very positive. Thank you so much for the help.

Mrs C, Market Harborough, Leicestershire

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