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Share Sale v Asset Sale – Which is Best?

We get asked this question all the time by our developer and investor clients. While both methods of acquiring real estate are capable of achieving the same result, the legal effect and tax treatment of the two structures are quite different. While the tax implications are quite important when assessing which structure to implement, this note focuses on the legal considerations.



  • In a share sale the buyer acquires the entire issued share capital of the target company (i.e. the company holding the real estate asset). In other words, the buyer acquires ownership of the company.

  • As the target company is a separate legal entity to the shareholders of the target company, ownership of the underlying assets does not change. The only assets that change hands are the shares in the target which are transferred by the seller to the buyer under a share purchase agreement and stock transfer form.

  • The ownership of the real estate asset therefore remains unchanged in a share sale. This means there is no property disposal and therefore no stamp duty land tax to pay. By contrast, stamp duty will be payable on the transfer of the shares, however, the tax on shares is far less than the tax payable on a property transfer. To put things into perspective:

  • On a £10 million share sale stamp duty of 0.5% is applied to the sale price. This works out to be £50,000.

  • By comparison, the stamp duty land tax payable on a property sale of the same price is £489,500 (assuming a straight forward commercial freehold transfer).



  • When a buyer acquires the shares in a company, it acquires all of its assets but also all of its liabilities. While this may be commercially beneficial to the seller, it can be a major drawback for the buyer – particularly if there are significant unknown liabilities. Examples of liabilities include:

  • Debts (such as loans/mortgages)

  • Interest payable

  • Bank account overdrafts

  • Accrued expenses

  • Commercial contracts

  • If there are company employees, any liability arising under employment contracts including salaries

  • Taxes payable

  • Litigation costs and settlements

  • Many real estate assets are held in special purpose vehicles (companies that are formed for the sole purpose of holding the property) and for these companies the liabilities will typically be minimal. Either way, the due diligence process in a share sale is far more in depth than in an asset transfer as the buyer’s solicitors will need to understand fully the obligations and liabilities of the target company and assess any possible legal issues it faces, in addition to reviewing the title to the property that it holds.


  • A potentially unattractive feature of an asset sale is that the transaction may be caught by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’).
  • TUPE protects the employment rights of any employee of the target business. In an asset sale this may include:
  • Anyone employed at the property in question (for instance a caretaker); or
  • Anyone working at or providing services at or to the property.
  • TUPE imposes obligations on both the buyer and the seller to inform and, in some cases, consult with representatives of affected employees before the transaction takes place. Dismissals that are made because of a TUPE transfer are likely to be automatically unfair and there are financial penalties imposed on the buyer/seller if they fail to comply with their respective obligations under the regulations.


These are just some of the considerations to take into account when negotiating the sale and purchase of real estate assets. For any enquiries, please contact Paula Abrahamian on 020 7632 1443 for property or Piers Larbey on 020 7870 3870 for company-related questions.


The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.