Introduction
Two options most commonly present themselves: a transfer of the shares in a company which owns the business or a transfer of the business itself.
A transfer of shares in conceptually straightforward. A business sale is not quite so obvious - it is a shorthand expression covering anything from the sale of the whole of the assets and undertaking of the seller (which could be a company, partnership or sole trader) to the sale of just a few assets which are assumed to be capable of being operated as a separate business. One of these assets would generally be the goodwill attaching to the business, for without this the transaction would constitute merely the transfer of assets rather than the transfer of a business.
Key points include:
The viewpoint of the seller and the purchaser will be fundamentally different. In practice it will be the relative bargaining positions of each side which will determine the shape of the final agreement.
A transfer of shares in conceptually straightforward. A business sale is not quite so obvious - it is a shorthand expression covering anything from the sale of the whole of the assets and undertaking of the seller (which could be a company, partnership or sole trader) to the sale of just a few assets which are assumed to be capable of being operated as a separate business. One of these assets would generally be the goodwill attaching to the business, for without this the transaction would constitute merely the transfer of assets rather than the transfer of a business.
Key points include:
- whether the transaction is to be a transfer of shares or the transfer of a business
- understanding the share transfer process or the business transfer process that is in each case commonly gone through before the transfer agreement is produced.
The viewpoint of the seller and the purchaser will be fundamentally different. In practice it will be the relative bargaining positions of each side which will determine the shape of the final agreement.