Whether to sell the assets of a business or the shares in the company that holds it is one of the most consequential decisions in any business transaction. It affects the price, the tax outcome, the liability position, and what happens to existing contracts and licenses.
And yet most business owners don’t think about it until they’re already in negotiation by which point the options have narrowed.
This article explains how each structure works, what the implications are for both buyers and sellers, and how to think about which one is right for your situation. For the full exit process, see our guides on how to sell a business and how to buy a business in Australia.
What Is an Asset Sale?
In an asset sale, the buyer purchases specific assets from the business — equipment, client contracts, intellectual property, goodwill, stock, and any other agreed components. The legal entity that holds those assets (the company or trust) stays with the seller.
The buyer effectively cherry-picks what they want. They don’t take on the company’s history, its debts, its tax obligations, or any other liabilities unless the sale contract specifically includes them.
After the sale, the seller holds the empty entity. It still needs to be wound down, repurposed, or dissolved
What Is a Share Sale?
In a share sale, the buyer purchases the shares in the company that operates the business. They acquire the entire legal entity including its assets, its contracts, its employees, its tax history, and any liabilities that come with it.
Everything transfers with the company. Client agreements, leases, licenses, and supplier contracts all stay in place. Nothing needs to be reassigned or renegotiated. For some businesses, this is a significant practical advantage. For others, it’s a source of risk.
At a Glance: Key Differences
| Asset sale | Share sale | |
| Liability | Buyer gets clean slate, no inherited history | Buyer inherits company history and obligations |
| Contracts | Must be re-assigned or re-negotiated | Transfer automatically with the company |
| Licenses | May need to be re-applied for | Generally transfer with the company |
| Seller CGT | More complex; depends on asset mix | Often simpler; may access CGT concessions more easily |
| Buyer tax | Higher cost base; better depreciation position | Takes on existing cost base |
| Stamp duty | May apply to certain asset classes | Generally lower or nil (varies by state) |
| GST | May be GST-free as going concern if structured correctly | No GST — shares are input-taxed |
| Preferred by | Buyers (cleaner risk profile) | Sellers (simpler, often better tax outcome) |
The Seller’s Perspective
As a seller, the right structure depends on how your business is held and what your personal tax position looks like. There is no general rule. That is a modelling exercise.
1. Why sellers often prefer a share sale
A share sale is typically simpler for the seller. The business transfers cleanly. There’s no need to individually re-assign contracts or licences. You transfer the entire entity in one transaction.
From a tax perspective, a share sale may give you better access to the small business CGT concessions. That includes the 50% active asset reduction and the 15-year exemption. Whether you can access them depends on how long you have held the shares and how the business is structured. See our full article on CGT when selling a business for how the concessions work.
Sellers of businesses held in a trust structure need specific advice here, the interplay between trusts, CGT concessions, and share sale eligibility is nuanced and not always in the seller’s favour.
2. Why sellers sometimes accept an asset sale
Buyers often push for an asset sale because it protects them from inherited liabilities. If the buyer won’t agree to a share sale, or if the premium they’re offering for a share sale doesn’t compensate for the additional tax, you may end up with an asset sale regardless.
In some cases, particularly where the company has legacy issues, outstanding ATO obligations, or a complicated history an asset sale may actually be in the seller’s interest too. It draws a clean line.
Our Selling a Business service covers how we work through structure decisions with sellers as part of exit preparation.
The Buyer’s Perspective
As a buyer, the structure affects your liability exposure, your tax position going forward, and the practical complexity of the transition.
1. Why buyers often prefer an asset sale
The primary reason is liability protection. In an asset sale, you’re not inheriting the company’s history. If the entity carries undisclosed debts, ATO disputes, or historical employment claims, those problems stay with the seller. The buyer does not inherit them.
An asset purchase also gives you a fresh cost base for the assets acquired. This can be beneficial for future depreciation claims and eventual resale. Good financial due diligence is essential either way but in a share sale, the stakes of missing something are higher because you’re buying the whole entity.
2. When buyers accept a share sale
Sometimes a share sale is simply more practical. If the business holds licences that are difficult to transfer, long-term contracts that require consent to assign, or government approvals tied to the entity, a share sale avoids those complications.
Buyers who proceed with a share sale need strong warranty and indemnity protections in the sale agreement, and thorough legal and financial due diligence. Our Buying a Business service covers how we support buyers through that process.
The Tax Implications in More Detail
CGT for sellers
Both structures can trigger CGT. How it is calculated and which concessions apply will differ depending on the structure. In a share sale, the CGT event is straightforward you’re selling shares, and the gain is the difference between what you receive and your cost base in those shares.
In an asset sale, CGT applies to each asset sold. Some assets are treated differently. Trading stock is one example. Each asset needs its own cost base established, which adds complexity. This is core business tax planning work, and it’s best done before the sale structure is agreed, not after.
Stamp duty
Stamp duty treatment varies by state. In most Australian states, the transfer of real property and certain other assets in an asset sale attracts stamp duty. Share transfers generally attract lower or no stamp duty (Queensland abolished share transfer duty in 2001, for example). In asset-heavy transactions, this can add up to a significant cost.
GST
Selling a business as a going concern may be GST-free if both parties are GST-registered and the right conditions are met. This applies to asset sales only. Shares are input-taxed and GST does not apply to share sales. Getting the GST treatment right from the start avoids significant cost and complexity at settlement.
Liability and asset protection
For the buyer, the liability implications of a share sale are significant. Proper asset protection structuring including the entity used to acquire, warranties and indemnities in the sale agreement, and a thorough pre-settlement due diligence process is essential when taking on an entire company.
How the Negotiation Usually Plays Out
In most business sales, buyers start by preferring an asset sale and sellers start by preferring a share sale. The final structure is usually a product of negotiation — with price as the lever.
A buyer who accepts a share sale and the associated liability risk will typically want a lower price, or stronger warranty and indemnity protections, to compensate. A seller who agrees to an asset sale may expect a higher headline price to offset the additional complexity and potential tax impact.
The right advisor models both scenarios before the negotiation starts so you know exactly what each structure is worth to you. That’s what a proper Business Valuation and tax analysis does it gives you the numbers to negotiate from, rather than conceding structure on the fly. For most sales, that valuation comes back to a multiple of EBITDA. See our guide to EBITDA multiples in Australia for how buyers typically arrive at that number.
The structure isn’t just a legal formality. It’s a financial decision. Model both before you negotiate. Don’t agree to a structure and then work out the tax consequences.
Common Questions
1. Can the structure be changed after the Heads of Agreement is signed?
It’s possible, but difficult. Once you record commercial terms in a Heads of Agreement, changing the structure means renegotiating the price. That creates delays and can erode trust. Agree on structure before the HoA is signed.
2. What if the business is held in a trust, not a company?
Trusts don’t have shares to sell, so a ‘share sale’ isn’t an option in the same way. Transactions involving trust-held businesses typically involve asset sales or the transfer of trust units, each with their own tax and legal implications. Specific advice is essential.
3. Does the structure affect the sale price?
Yes, often significantly. A share sale typically involves a price adjustment to reflect the buyer’s additional liability exposure. An asset sale may attract a higher headline price but result in a worse after-tax outcome for the seller. The only way to know which is better in your situation is to model both.
Not sure which structure is right for your situation?
This is one of the most important decisions in any business sale. Book a discovery call and we’ll model both scenarios for your specific situation or explore our Selling a Business and Buying a Business service pages for more detail.
