Asset purchase vs share purchase for startup acquisitions
The trade-offs between asset and share purchases for buying or selling a small startup — tax, liability, and speed of close.
- 95% of sub-$1M deals close as asset purchases — cleaner liability, simpler close.
- Share purchases preserve contracts and history but inherit every skeleton.
- Tax treatment differs meaningfully by country. Get local advice before signing LOI.
Asset purchase, in plain English
The buyer forms a new entity and buys specific assets: code, brand, domain, customer list, contracts (assigned individually). The seller keeps the shell company and any historical liabilities. Standard for micro-deals.
FAQs
Usually share purchase in the UK (Business Asset Disposal Relief) and asset purchase in the US (Section 1202 exceptions aside). Check with a tax advisor.
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