It is an interesting dynamic, and one that often requires negotiation to get right. Usually the buyer wants an asset sale and the seller wants a share sale. The reason? Usually taxes and risk.

Generally a share sale is more tax advantageous for the seller and less so for the buyer. Many sellers have some or all of the lifetime capital gains exemption available and gains on share sales apply.

Buyers on the other hand benefit from asset purchases so they can set up current values for assets and depreciate them right away.

As for risk, the buyer of shares assumes all of the risk in the company whether known or not. The slip/ fall on the ice last year? It may result in a large claim later after the new owner has the company.

I had one small business sale that started out as an asset sale and ended as a share sale when the owner realized the tax bill that would due on the asset sale.

As always in business sales, make sure you have a team of accounting, legal and tax experts to guide you.