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Acquiring a Business? Here’s What You Need to Know.


acquiring a business by asset and share purchase

When it comes to acquiring a business, two primary methods are often employed: share purchase and asset purchase. Both approaches aim to achieve the same commercial objective, but they vary significantly in legal implications, tax treatment, and advantages and disadvantages. It is important to have a fair share of understanding of the distinctions between these acquisition methods to help you make an informed decision.

Share Purchase and Asset Purchase Defined:


A share purchase involves acquiring all the shares of a company, thereby gaining ownership of the company along with its assets, liabilities, and obligations. On the other hand, an asset purchase entails acquiring specific assets and rights of the target business while sometimes also assuming certain liabilities. In this scenario, the buyer has the flexibility to choose which assets and liabilities to acquire.

Key Differences between Share Purchase and Asset Shares:


1. Control Over Transfer:

  • In an asset purchase, the buyer has control over selecting the assets and liabilities they wish to acquire, minimizing risks.

  • In a share purchase, the buyer acquires the entire company and all its assets and liabilities, relinquishing control over the selection of specific assets.

2. Shareholder Involvement:

  • In a share purchase, acquiring the shares necessitates approval from each selling shareholder, potentially causing delays or deal hindrances.

  • In an asset sale, individual shareholder involvement is not mandatory, simplifying the process.

3. Structural Complexity:

  • A share purchase is generally simpler, involving the transfer of share capital without the need to identify and transfer specific assets and rights.

  • An asset purchase can be more complex due to the necessity of identifying and transferring various assets and rights.

4. Due Diligence:

  • Due diligence is typically longer and more exhaustive in a share purchase, as the buyer inherits all of the company’s liabilities.

  • In an asset purchase, due diligence is more focused, involving scrutiny of selected assets and liabilities.

5. Employees:

6. Tax Implications:

  • Tax implications differ; in an asset purchase, the selling company is taxed on the consideration paid by the buyer, potentially incurring additional taxes upon distribution to shareholders.

  • In a share purchase, proceeds of the sale are paid directly to the shareholders, often resulting in a lower tax liability.

7. Warranties and Protections:

  • More extensive warranties are usually sought in share purchases due to the transfer of all company liabilities.

  • In an asset purchase, specific warranties are sought concerning the assets being acquired.

acquiring a business by asset and share purchase

Conclusion:

Selling or acquiring an aviation business is a momentous life event, presenting a unique opportunity for owners or shareholders to shift towards new endeavors, embrace retirement, or prioritize family time.


This transition often comes with emotional weight for business owners. At Brookfield Aviation Finance, we deeply understand the significance of such decisions and are committed to supporting our clients in navigating this intricate process with the utmost professionalism and expertise.


Our paramount objective is to offer steadfast assistance, enabling clients to comprehend the importance of distinguishing between asset and share purchases when selling their company. We provide invaluable market insights to aid in making informed decisions regarding sales, ensuring a seamless and well-guided process.


Our distinguished track record proudly highlights numerous satisfied customers who have confidently chosen us as their trusted partner in this pivotal venture.

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