Buying a company as a share or asset purchase: What is the difference
When buying a company you can choose to purchase the company via acquiring the shares or the assets.
Fundamentally when you buy a company via purchasing shares you are buying the shareholder or holders’ shares of the company. Yet, this is normally the entire share capital, meaning all the shares. As a consequence, this will only occur when purchasing a company, as companies have to be registered with Company House and therefore require shares. However, this can be as little as 1 share, meaning there is one shareholder. But it’s more like in large enterprises to be many shares, with numerous shareholders.
Yet when you buy a company via purchasing the assets you are acquiring the assets owned by the company.
Typically, assets include goodwill, manufacturing and IT equipment, and all intellectual property, including client data, plus infrastructure, and brand assets, such as websites, logos, and social media accounts. The assets will relate directly or indirectly to the products or services the business produces or plan to produce and can be tangible or intangible.
In addition, some asset business purchases can include rights and liabilities. This is very much dependent on the type of company you are purchasing. For example, if you purchase a construction company you may be liable for past building work. But if you buy a hair salon, your liabilities are likely to be limited to ensure you have the correct insurance.