Morr & Co Solicitors

Business Sales and Purchases

Buying or selling a business can be a transformational experience both for you and for your business

If you are planning on buying or selling a business it is crucial that you select M&A lawyers with appropriate credentials and experience. The purchase of a business and achieving an exit strategy are critical milestones and our corporate solicitors have a track record of providing expert guidance to our clients.

No two transactions are ever the same and whether you are building your business through acquisitions, acquiring a distressed business from an administrator or selling your business to a trade buyer, private equity house or to management, we make it a priority to understand your objectives and priorities so that we can deliver a deal that is tailored to your specific goals and circumstances.

We regularly act for both buyers and sellers and our corporate team is highly experienced in understanding the challenges that both parties face. As part of the Europfides network, we also have access to lawyers and other professional advisors across Europe and Asia, allowing us to provide seamless cross-border M&A services.

Transaction Structures (assets vs shares)

In addition to the variety of transaction types (trade sales, MBOs, EOTs etc.) there are two principal ways in which to sell / acquire a business,. These are:

  • an asset sale, in which all (or a substantial part) of the assets and contracts of the business are transferred to the buyer; and
  • a share sale, in which the shares in the company that owns the business transfer to the buyer.

If the business is owned by an individual or a partnership, the deal must progress by way of an asset sale (unless it is first incorporated). If the business is carried on by a limited company, the buyer and seller will typically agree on whether to proceed via a share sale or an asset sale.

When choosing between these options, there are advantages and disadvantages for both buyer and seller, including:


  • Share sale – the legal entity carrying on the business continues to be the company and, externally, very little will have changed. This also means that existing trading contracts are more likely to be unaffected (although some contracts contain terms that allow for termination, or require notice, if there is a change of ownership).
  • Asset sale – the buyer will become the trading entity. This means that the transfer of specific assets may need to be "perfected" via additional steps (such as the registration of real estate transfers with the land registry and the transfer of domain names). All existing contracts must also be assigned (which often requires the consent of the relevant customer or supplier).


  • Share sale – all of the existing liabilities of the business remain with the company and so must be factored into the purchase price by the buyer. As a result of this, the buyer will be keen to obtain appropriate certainty on the exposure (via diligence and contractual protections). An underlying liability will remain with the company even if the buyer (and / or the seller) did not know about it.
  • Asset sale – in most cases, existing liabilities remain with the seller, unless the buyer expressly agrees to acquire them (which will typically require third party consent).


The treatment of staff is quite different between a share sale and an asset sale. On a share sale, the employer does not change. On an asset sale, the employees will transfer to a new employer. This usually happens by automatic operation of law and is extremely difficult to avoid.

The Transfer of Undertakings (Protection of Employment) Regulations (often known as TUPE) mean that not only do the employees automatically transfer to the new owner of a business, but they do so as if they had always been employed by the buyer, so all existing liabilities of the seller are assumed by the buyer.


  • Share sale – assuming that the assets of a business belong to the company, the assets will all remain under the ownership of the company when the shares are transferred to the buyer, even if the buyer and/or seller were unaware of them.
  • Asset sale – the assets will each need to be transferred to the seller. The parties can "cherry pick" which assets he wants to acquire and the agreement between the buyer and seller must identify which assets are being sold and which are being retained by the seller.


  • Share sales – VAT is not chargeable on a sale of shares.
  • Asset sales – VAT is not chargeable if is the sale of a "going concern". If this condition is not met, then VAT may be payable on the transfer of the assets.

Stamp Duty

  • Share sales – stamp duty is payable at the rate 0.5% of the purchase price.
  • Asset sales – stamp duty is not payable on the transfer of most assets. The most obvious type of asset where stamp duty will be payable in on the transfer is land.

There are also many common elements in a business sale, whether it proceeds as a share sale or as an asset sale.

In each case the buyer will wish to undertake due diligence enquiries, to ensure that it knows what it is buying and to underpin this exercise with contractually binding provisions regarding the business and its assets (known as warranties and indemnities).

The parties will also need to negotiate and agree the price and payment terms. Notably, the parties may want to agree a mechanism to adjust the purchase price to take account of the financial position of the business at completion (such as a stock take or to clarify the cash, debt and working capital position). They may also agree an enhanced or reduced purchase price based on the future performance of the business.


The tax treatment for both buyer and seller may vary according to whether the deal is a share sale or an asset sale. Tax issues that commonly arise relate to the structuring of the acquisition vehicle and how to use retained earnings in a tax efficient way to finance part of the purchase price. We also commonly see tax issues arising in relation to the structure of the purchase price, particularly with deferred consideration and the use of loan notes or consideration shares in the acquiror.

We have significant experience with these issues and work with tax advisers and accountants at an early stage to ensure that the transaction is tax efficient.

How can we help?

In addition to our corporate team's credentials in advising on M&A transactions, we provide a full service, including corporate support from our property and employment lawyers. If you have any questions or are looking for information on business purchases or any other corporate law matter, please contact a member of the corporate team.

Greg Vincent

Greg Vincent

Partner, Head of Department

Corporate & Commercial