This is one of the most common questions we are asked about. So what's the difference between them?
Simply put a Share Sale is where you are buying all of the company's shares - you become the new CEO of the Seller's corporation.
An Asset Sale is where you are buying all of the assets that the Seller's corporation owns - but the Seller will keep the shares and the corporation.
Why one over the other?
In an Asset sale, the Seller MUST terminate the employees - so if you're intending to keep operating the existing concept that could become a serious issue.
In an Asset sale, all of the Permits and Licences must be transferred or cancelled. It's not the Seller's company running and operating it, it's your brand new company. So you need to start from scratch.
In an Asset sale, first you make an offer. If it's accepted, then the Seller will tell you what's included for your price.
This one seems to be confusing to a lot of people, so let me try to explain it a different way.
If Francois owns a fancy French restaurant full of gorgeous furniture and a big wine cellar and is selling it for $500,000 and you offer $200,000 will he accept? Well he might. But you can count on the fact that he's keeping the furniture and the wine.
The full asking price includes everything. So if you think you're going to get 100% of the assets and pay 50% of the price, you're most likely mistaken.
Now what about the other side?
In a Share Sale the employees aren't affected. It's the same company that employs them, there's just a new owner.
The Permits and Licences are usually not affected as the company is the same (Liquor is the only possible exception, as you will still need to pass the Government's checks).
Also there are substantial tax savings to the Seller due to Canada's Capital Gains Tax Rules.
There are many more points to discuss, but these are the "core" ones.
If you'd like to discuss further, please email or call and we'd be happy to talk!
