Whenever someone is discussing buying or selling a business, the term ‘business sale’ will often be used, but in truth, it is often used wrongly. Commercial law defines a business sale as a specific legal process, and often the transaction taking place is not a business sale but a share sale.
A business sale and a share sale are two distinct types of transaction, and each has several legal differences in commercial law, even though once the sale takes place, it has the same outcome. To clarify what this means in practical terms, here are some of the differences between business sales and share sales
The legal owner of a business is the company and whilst that business ownership does not change, with the buying and selling of shares the ownership of the company can change. In certain states, there are advantages to share sales such as no transfer duties to be paid. There are also administrative benefits such as there being no need for new bank accounts to be opened and contracts with employees and suppliers remain in place.