If you are considering buying an existing business there are two different approaches you could take: a purchase of shares or a purchase of assets.
Transferring shares seems simple enough; usually you buy a controlling block of the voting shares of the company. If you opt for this route however, you should bear in mind that by purchasing shares you will also take on all the liabilities and legal obligations of the business – including any “skeletons” lurking in the company cupboards such as unforeseen tax bills.
If buying assets you can be selective, taking only those assets and liabilities you want.
When structuring your business acquisition there are three initial decisions you will need to make:
- whether to buy assets or shares
- how much to pay the seller
- how to finance the purchase
Commercial factors will play a major part in answering these questions but you should also consider the tax and accounting implications.
For advice on which route is appropriate for your circumstances and guidance through the acquisition process, please feel free to contact a member of our team.