Share Sale vs Asset Sale Flashcards
What is a share sale?
Shares of company sold to Buyer - entirety of the Target moves across to the Buyer
What is a business/asset sale?
Buyer buys a business of the Target as a going concern
All business + goodwill transfers to Buyer
Who is the seller in a share sale?
Shareholders of Target
Who is the seller in an asset sale?
Target (company that owns the business)
Who receives the consideration on a share sale?
Consideration goes directly to selling shareholders
Who receives the consideration on an asset sale?
The company. It needs to be extracted by shareholder of Seller company by dividend or liquidation
What tax will the seller pay on a share sale?
The shareholders of Target will pay corporation tax, if it is a company
OR
CGT if shareholders are individuals
What tax will the Buyer pay on a share sale?
Stamp duty at 0.5%
What is the difference between a private treaty sale and an auction sale?
Private treaty = Seller + 1 Buyer
Auction = Multiple buyers bid
Where are class 1 and class 2 transactions relevant?
Listed companies - depending on the size of the transaction, a listed company may need to make an announcement to RIS and get SH approval
Class tests - % ratios which classify a transaction according to its size
What is a draft process letter?
Invitation to treat - sent to identified bidders at start of the auction process who have signed a confidentiality agreement
