Asset Sale vs. Share Sale

Welcome to the Pacific M&A and Business Brokers’ video blog. My name is Andrew Brown.

Asset Sale vs. Share Sale: How do I know which one is better for me?

When considering selling your business, a fundamental consideration will be the decision as to whether your offering will be structured as an Asset Sale or a Share Sale.

Fundamental to making this decision are the questions:

  • Is my business incorporated?
  • Am I eligible for federal capital gains tax exemption on the sales proceeds?
  • Does my current share structure maximize on that tax exemption?

In Canada, a Share Sale is advantageous to sellers who have not previously utilized their once-in-a-lifetime federal capital gains tax exemption.

An Asset Sale in Canada where the company holds a reasonable amount of capital assets, is more attractive to a buyer because it often provides the buyer with an opportunity to restructure asset values, thereby taking advantage of their increased tax basis.

As a seller, it is important to bear this in mind, as this may not impact the selling price, however, it could greatly adversely impact the left over proceeds of sale, or money that is left in your pocket.

Want to know how we can help you throughout the entire selling process? Talk to us at Pacific M&A and Business Brokers where knowledge, experience, and trust come together.