Asset Sale vs. Share Sale: What’s Better for Buyers?

In an aviation business acquisition, one of the most fundamental decisions that shapes the structure of the deal is whether it will be an asset sale or a share sale (also called a stock sale). While both structures result in the transfer of ownership, the implications, legal, tax, and operational, are vastly different, especially from the buyer’s perspective. The choice between an asset and a share sale isn’t just a technical formality; it can significantly impact risk exposure, post-deal integration, and the long-term success of the transaction.

In this article, we will explore how one is different from the other, and if you require any assistance to sell your business, we urge you to contact our team at Invest@brookfieldaviationfinance.com, as they will assist you and make the intricate process a seamless and hassle-free exit.

In an asset sale, the buyer purchases selected assets and liabilities of the target company rather than acquiring the company as a legal entity. These assets may include physical property, inventory, customer contracts, intellectual property, equipment, and goodwill. The buyer chooses what to acquire and what to leave behind, making this structure particularly attractive for buyers who want a clean slate, free from unknown liabilities or legacy obligations.

Buyers generally prefer asset sales for the control and protection they offer. Since the buyer is not stepping into the shoes of the entire legal entity, they are not automatically assuming responsibility for historical liabilities unless expressly agreed to. This includes issues like pending lawsuits, tax exposures, employee claims, or hidden contractual obligations. From a risk management standpoint, this ability to “cherry-pick” what is included in the deal provides buyers with a far greater sense of security.

There are also important tax advantages in asset sales for buyers. The most notable is the ability to step up the tax basis of the acquired assets to their purchase price, which allows for accelerated depreciation and amortisation. This can result in significant tax savings over time, an immediate financial incentive for many acquirers. In contrast, in a share sale, the assets remain at their original book value, which offers no such step-up unless special tax elections are made.

That said, asset sales can also be more complex to execute, especially when the target has numerous contracts, licences, or permits that must be individually assigned. In regulated industries, certain licenses may not be transferable, and in others, customer or supplier agreements might have change-of-control clauses that trigger renegotiation. For businesses with a high volume of contracts or embedded relationships, this administrative burden can become a hurdle, and buyers must weigh the benefits of control against the complexity of execution.

On the other hand, a share sale involves the purchase of the entire legal entity, shares, liabilities, contracts, employees, and everything in between. From a seller’s standpoint, this is often the preferred structure, as it provides a cleaner and faster exit. All obligations, tax issues, and pending matters transfer with the business, and there’s typically less need to renegotiate or reassign individual agreements.

For buyers, share purchases come with greater legal and financial exposure, as they inherit both the known and unknown liabilities of the business. Even with detailed due diligence, it’s difficult to uncover every risk embedded in the company’s history. As a result, buyers in share deals often negotiate more aggressively on representations, warranties, and indemnities, and will typically require the seller to escrow a portion of the purchase price or purchase RWI (representations and warranties insurance).

There are scenarios, however, where a share sale might make more sense for the buyer. In acquisitions where continuity of operations is critical, such as with government contracts, IP rights, or regulatory licenses that are not easily assignable, a share sale may be the only practical path. It also avoids the complications of transferring employees or renegotiating complex agreements. In cross-border deals, legal or tax systems may make share sales structurally simpler than asset sales.

Ultimately, what’s “better” for buyers depends on the nature of the target business, the buyer’s risk appetite, the tax implications, and the operational goals post-acquisition. In asset-light businesses, a share sale might be the cleaner option. But for buyers seeking greater control, minimised liability, and improved tax treatment, an asset sale is often the more favourable route, despite the administrative complexity.

Brookfield Aviation Finance often suggest to buyers that the optimal structure is not the one that’s theoretically ideal, but the one that best matches their strategic goals, timeline, and risk tolerance. Every deal has trade-offs, and choosing the right structure is about aligning the deal mechanics with the broader vision of what the buyer wants to build.

Selling a business is difficult because you will need to evaluate, organise documents, manage, and measure every requirement minutely. Having a team of M&A experts is essential to ensuring that you sell your business to the right buyer at the right time. We understand that every business is unique and requires different strategies to mark success. To find out what works best for you, contact us at Invest@brookfieldaviationfinance.com. We will examine the best option for your business.