Let’s deal with the SPA first, because it is a completely different transaction. Here, the individual shareholders are selling their company, whether the company runs a small coffee bar or a large engineering business. It has to be a share sale. Once the selling shareholders have sold out, they no longer have anything to do with the business.

Both the BSA and APA are two kinds of agreement dealing with the sale of assets. Often the terms are used interchangeably.   Occasionally they are differentiated as follows:

  • The BSA is used for the sale of businesses, whether owned by an individual or a company, where the main asset is goodwill and that goodwill is dependent upon the location of the business premises. For example, a coffee bar, public house, or retail shop fall in this category. The premises may be freehold or leasehold and if the former, the value will be higher.
  • An APA is used where there are a number of assets, for example, intellectual property rights (patents, trademarks, copyright and the like) or plant and machinery as well as goodwill and property. These transactions usually require greater degree of investigation and are therefore more complex. Value is a consideration but by no means the only one.