Share sale versus asset sale
The two ways to buy a company in BC: buy its shares and take everything, or buy selected assets and leave the rest with the seller's corporation
In a share sale, the buyer purchases the shares of the corporation that owns the business, so the company itself, with its history, contracts, licences and liabilities, changes hands intact. In an asset sale, the buyer purchases specific assets from the corporation, such as equipment, inventory, customer lists, goodwill and the right to the name, and the seller keeps the corporate shell and whatever was not sold.
Sellers of incorporated BC companies often prefer a share sale, because of how the proceeds may be taxed and because the company's track record and agreements transfer without needing reassignment. Buyers often prefer an asset sale, because they can choose what they take, leave past liabilities behind and reset the depreciable value of what they buy. The choice affects price, licences, leases, employment, tax and risk for both sides.
The decision belongs with your lawyer and CPA, who assess the legal and tax consequences. Our role is the commercial side: modelling what each structure means for the net proceeds and the risk, and making sure the price reflects the structure chosen. A seller who gives up a share sale should expect to be compensated for it. A buyer who accepts a share sale should expect stronger representations, a holdback and thorough diligence.
Start with a confidential conversation.
Tell Ali where the business is and what you want to happen next. You leave with a straight read on value, timing and the two or three moves that matter, whether or not we work together.