What Are The Advantages Or Disadvantages Of Buying Shares Or Assets?

Q: What Are The Advantages Or Disadvantages Of Buying Shares Or Assets?

Buying Shares Advantages You step into the seller’s shoes. There is no third party involvement so it is more low key Warranties and indemnities are given by the seller personally Disadvantages You take over the company’s problems, “warts and all” The risk is consequently greater and the transaction more involved Buying Business Assets Advantages There are fewer risks involved You are not liable for any debts before the date of purchase Disadvantages Each asset has to be transferred to you, often involving third party consent The selling company gives the warranties/indemnities, not the seller shareholder. You may want him or her to guarantee those warranties and indemnities

Buying Shares

Advantages

You step into the seller’s shoes. There is no third party involvement so it is more low key
Warranties and indemnities are given by the seller personally

Disadvantages

You take over the company’s problems, “warts and all”
The risk is consequently greater and the transaction more involved

Buying Business Assets

Advantages

There are fewer risks involved
You are not liable for any debts before the date of purchase

Disadvantages

Each asset has to be transferred to you, often involving third party consent
The selling company gives the warranties/indemnities, not the seller shareholder. You may want him or her to guarantee those warranties and indemnities

About the Author: Martin Truman

Solicitor and Managing Director at Truelegal Solicitors: Martin has spent 25+ years advising entrepreneurs and business owners. With over 3,100 small and mid-size business sale and purchase transactions completed under his watch, he is confident that Truelegal has the toolkit to deal with most issues that buyers and sellers of UK businesses encounter. Realising the full value of a business for its owner on exit is his passion.