When selling a business, the way the deal is structured can be just as important as the price. Different approaches affect how you are paid, the risks you take on, and the tax implications of the transaction. Understanding the main structures helps sellers prepare for negotiations with confidence.
 

Share Sale vs. Asset Sale

Share Sale

• The buyer acquires the shares of the company.

• The company itself continues to own all assets, contracts, and liabilities.

• Often preferred by sellers as it can be simpler and may provide tax benefits (e.g. eligibility for Business Asset Disposal Relief).
   

Asset Sale

• The buyer purchases specific assets of the business (e.g. equipment, contracts, goodwill).

• The seller keeps ownership of the company entity and any liabilities not included in the sale.

• Can be more complex for transferring employees, contracts, and licences.

Which approach is used depends on negotiations, tax considerations, and the buyer’s appetite for risk.
 

Earn-Outs, Deferred Consideration, and Vendor Financing

Not all sales involve the full payment up front. Alternative deal structures can help bridge gaps between buyer and seller expectations.

• Earn-Outs

  • Part of the price is paid later, linked to the future performance of the business.

  • Useful if the buyer wants reassurance that profits will continue after the handover.

• Deferred Consideration

  • The sale price is agreed, but some of it is paid in instalments over a period of time.

  • Can help a buyer manage cash flow and may reduce the need for external finance.

• Vendor Financing

  • The seller effectively lends money to the buyer, who repays over time.

  • Provides flexibility but means the seller remains partly tied to the buyer’s ability to pay.
     

Why Deal Structure Often Matters More Than Headline Price

It’s tempting to focus on the top-line number, but the detail of how and when payment is received can be even more important. For example:

• A “higher” price paid mostly through an earn-out could carry more risk than a lower but fully guaranteed cash offer.

• Tax treatment may differ depending on whether the deal is structured as a share or asset sale.

• Sellers should consider certainty of payment, timing, and risk alongside the headline figure.
   

Final Thoughts

The right deal structure balances the seller’s need for certainty with the buyer’s need for comfort. Understanding these structures early can help business owners set realistic expectations and enter negotiations well prepared.
 

Note: This overview is for general guidance only and should not be considered tax or legal advice. Professional advice should always be sought when negotiating a sale.