"Why do you only buy the activity and not the whole company?" It's a question that comes up again and again when buyers first encounter a business acquisition — the confusion often centers on whether, as a buyer, you risk taking on the seller's old obligations. The answer lies in the difference between an asset purchase and a share purchase — two fundamentally different ways of structuring an acquisition.

Share purchase: You take over the whole company

In a share purchase, you buy the shares or interests in the company running the business. The company continues unchanged — with the same registration number, the same history and the same agreements — just with you as the new owner. This also means you generally take over everything contained within the company: assets, but also obligations, including any hidden debt items, pending cases, or warranty obligations from previous deals.

Asset purchase: You only buy what actually drives the business

In an asset purchase, you instead buy the specific assets that create the value — for example inventory, operating equipment, customer list, domain, trademarks and goodwill — without taking over the legal company itself. The seller's company continues to exist, with the seller as its continuing owner, while you start (or fold the activity into) your own company.

The advantage is that obligations relating to previous deals and matters arising before you took over generally stay with the seller's company — not with you. This provides important legal protection against unknown or hidden obligations you had no way of discovering during your due diligence.

Why do sellers often choose to sell "out of the company"?

There can be several reasons a seller proposes an asset purchase rather than a share purchase:

  • The seller wants to keep the company: Perhaps to continue another activity, or because the company has tax loss carryforwards the seller wants to use elsewhere.
  • The company's credit history: The seller may want to keep the company's established credit history and accounting data for future use.
  • A cleaner deal for both parties: An asset purchase can make it easier to precisely define what's being transferred, without mixing old company matters into the deal.

What are the downsides of an asset purchase?

  • More legally complex: Everything the buyer needs to take over — company name, website, phone number, customer agreements, employees, banking relationships — needs to be specifically transferred by agreement, instead of automatically following as in a share purchase.
  • The customer experience can be unclear: Even though obligations legally stay with the seller's company, customers often expect the new owner to also resolve problems originating from before the takeover — ignoring this can damage reputation, even if you're not legally obligated.
  • Can trigger different tax and VAT treatment than a share purchase, for both seller and buyer — this should always be clarified with an accountant in advance.

What should you, as a buyer, choose?

As a rule of thumb, many buyers prefer an asset purchase, precisely because it limits the risk of taking on unknown obligations — particularly in small and medium-sized deals, where it can be hard to get full insight into the company's history. For larger, well-documented companies, where thorough due diligence has been carried out, a share purchase can instead be simpler to execute — for example because existing contracts, permits or employee matters automatically come along, without needing to be renegotiated individually.

How to approach the acquisition itself

  1. Clarify the structure early: Discuss with the seller whether it's an asset or share purchase already in the initial dialogue — it affects both the price negotiation and the further process.
  2. Carry out thorough due diligence: Regardless of structure, you should thoroughly investigate the business's finances, contracts and affairs before committing.
  3. Have the agreement precisely drafted: Particularly in an asset purchase, it needs to be clear and unambiguous exactly which assets, agreements and rights are transferred.
  4. Plan the transition with customers: Be prepared that customers don't necessarily know the difference between an asset and a share purchase — communicate clearly what's changing, and what isn't.

Frequently asked questions

Do I take over old debt if I buy a business?

It depends on the structure. In a share purchase, you generally take over the entire company, including any debt and other obligations. In an asset purchase, such obligations generally stay with the seller's company, unless otherwise agreed.

Can I keep the business's name and customer list if I only buy the assets?

Yes, but it needs to be specifically agreed in the transfer agreement — company name, domain, trademarks and customer data don't automatically come along, as they would in a share purchase, where the company itself changes owner.

Is an asset purchase always the safest choice for me as a buyer?

It's often the most risk-limiting model, particularly if you're unsure about the company's history, but it's not automatically the right choice in every situation — for large, well-documented businesses, a share purchase can be both simpler and just as safe, provided thorough due diligence is carried out.

Considering acquiring a business? See the current selection of businesses for sale, read our guide to finding and taking over the right business, or book a no-obligation call if you'd like sparring on an asset or share purchase.

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