Share sale

A share sale transfers ownership of the company itself rather than its individual assets, so the buyer acquires the entity along with everything it owns and everything it owes.

When a share sale comes up at $50k–$150k

Not often, and usually for one specific reason. Contracts that cannot be assigned without consent stay put in a share sale, because the counterparty is still dealing with the same company. Licences, regulatory permissions and long-standing supplier terms behave the same way. Sellers sometimes prefer it for tax reasons in their own jurisdiction, which is a conversation for their accountant rather than the buyer.

Where it bites

The buyer inherits history. Tax filings, employment arrangements, past contracts, any dispute that has not surfaced yet: all of it comes with the shares. That widens diligence well beyond the product and adds both time and professional fees to a deal whose economics may not carry them. It also puts far more weight on the warranties, since they become the buyer's main protection against what the accounts do not show.

A worked example

A two-sided platform listed at $120,000 has 40 supplier agreements, each prohibiting assignment without written consent. An asset transfer would mean 40 conversations and 40 opportunities for a supplier to renegotiate or leave, which puts the revenue the price is built on at risk. A share sale leaves every agreement untouched. In exchange the buyer spends an extra fortnight and a few thousand dollars on entity diligence, and negotiates harder on warranties.

Why it matters

Choosing between a share sale and an asset sale is a decision about what the buyer is willing to inherit. At this deal size it is worth doing only when something genuinely cannot travel any other way.

This is general information. A deal at this size still warrants a lawyer's eye on the structure before it is agreed.

Related: asset-sale, representations-and-warranties, due-diligence