{"id":217740,"date":"2022-09-25T14:25:01","date_gmt":"2022-09-25T01:25:01","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=217740"},"modified":"2025-04-24T17:57:41","modified_gmt":"2025-04-24T04:57:41","slug":"asset-vs-share-sale","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/business-sale-and-purchase\/asset-vs-share-sale\/","title":{"rendered":"Asset Sale vs Share Sale in NZ"},"content":{"rendered":"\n<p><a href=\"https:\/\/legalvision.co.nz\/business-sale-and-purchase\/sell-your-company\/\">A business sale<\/a> is a significant decision that needs careful planning and consideration. When selling your business, you need to decide whether to structure the sale as an asset or a share sale. Each option has its own structure, and your choice depends on your business goals. However, most buyers prefer asset sales because it sets them up with a fully functioning company. This article will outline an asset and share sale and some differences between them.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is an Asset Sale?<\/h2>\n\n\n\n<p><a href=\"https:\/\/legalvision.co.nz\/business-structures\/current-assets-vs-fixed-assets\/\">An asset sale<\/a> involves the buyer purchasing all or some of your business assets. They will also take on certain liabilities associated with your business. The sale will be between your company (as the vendor) and a third party (as the purchaser).&nbsp;<\/p>\n\n\n\n<p>An asset sale will often include the sale of the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>plant and equipment;<\/li>\n\n\n\n<li>land (if owned by the company and the business is operated out of premises located on that land);<\/li>\n\n\n\n<li>lease (if the company does not own the land but the premises where the business is located is intended to be handed over to the buyer);<\/li>\n\n\n\n<li>machinery;<\/li>\n\n\n\n<li>stock; and<\/li>\n\n\n\n<li>certain intangible assets, including goodwill and intellectual property.<\/li>\n<\/ul>\n\n\n\n<p>To finalise the asset sale, you can create an asset purchase agreement to eliminate future disputes and for clarity.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Share Sale?<\/h2>\n\n\n\n<p>Alternatively, a <a href=\"https:\/\/legalvision.co.nz\/business-structures\/buying-a-company-share-sale\/\">share sale<\/a> involves the buyer purchasing all or some of your company\u2019s shares. This transaction is between the company\u2019s shareholders (as the vendor) and a third party (as the purchaser). Following a share sale, all business assets and liabilities remain with the company.&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p>To formalise the share sale, you may choose to draft a share purchase agreement with the help of your lawyer.&nbsp;<\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    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You want to avoid making the wrong decision that may affect what you had in mind for your business. Moreover, each type of sale has its considerations that could affect you and your employees.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Employees<\/h3>\n\n\n\n<p>The first difference between the type of sales is the effect on employees. During an asset sale, employment contracts do not automatically transfer to the buyer. If a buyer wishes to keep existing employees working in the business, you will need to run a collaborative process with the buyer. In this, you terminate your employees\u2019 employment agreements at the same time the buyer offers new contracts. Often, an asset sale and purchase agreement will require the buyer to offer employment to existing employees on the same or similar terms that currently apply.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Consideration as to Liabilities<\/h3>\n\n\n\n<p>An asset sale allows buyers to choose what assets and liabilities they will purchase. As a result, you may be left with some assets and liabilities related to the business after the sale has been completed. These may be of little use to you, and the liabilities are a significant ongoing burden if you cannot sell all assets and liabilities relating to the business.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, if the buyer only wishes to purchase your plant and equipment, liabilities such as debts and outstanding payments will still reside. The only liabilities you do not have to worry about are those relating to the plant and equipment (such as equipment maintenance).<\/p>\n<\/div>\n\n\n\n<p>In a share sale, all assets and liabilities remain with the company, so this can be a much cleaner transaction from a seller&#8217;s perspective.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tax Implications<\/h3>\n\n\n\n<p>Shares are capital assets, and any income you get from the share sale is non-taxable. The profit from the share sales will only be taxable if you:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>bought the shares for resale instead of long-term investment; and<\/li>\n\n\n\n<li>deal in shares.<\/li>\n<\/ul>\n\n\n\n<p>Taxation on asset sales is a bit more complicated, and it is best to speak to a tax professional to ensure the sale is taxed properly. Certain assets can be taxable, while the rest are not.<\/p>\n\n\n\n<p>For example, if you are selling your goodwill, it may be either a:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>personal or business goodwill attached to the business; or<\/li>\n\n\n\n<li>local or site goodwill attached to the location and premises.<\/li>\n<\/ul>\n\n\n\n<p>The income tax depends on the goodwill you are selling. Personal and business goodwill are usually non-taxable when they relate to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the reputation of your business;<\/li>\n\n\n\n<li>client base; or<\/li>\n\n\n\n<li>trade marks and logos.<\/li>\n<\/ul>\n\n\n\n<p>Alternatively, local or site goodwill is usually taxable. This situation can arise if you grant a lease to the buyer or sub-lease the premises to them.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/10\/28131832\/how-to-sell-your-business-guide-_-560x792-1-e1635392481928.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">How to Sell Your Business in New Zealand<\/div>\n            <div class=\"body-text\">\n                <p>Looking to sell your business? This free guide will help you to understand the moving parts that impact a successful sale. <\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/guide-to-selling-your-nz-business.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>An asset sale involves selling certain assets and liabilities associated with your business. Alternatively, you can choose to sell your shares in the company that operates the business as part of a share sale. The differences between a share sale and an asset sale are comprehensive. So, you should talk to a lawyer before landing on an agreed structure to ensure you choose the most appropriate option for your business.&nbsp;<\/p>\n\n\n\n<p>If you need help understanding the difference, our experienced <a href=\"https:\/\/legalvision.co.nz\/business-sale-purchase-lawyers-lp\">business lawyers<\/a> can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at\u00a0 <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1664068771829\"><strong class=\"schema-faq-question\">What is a share sale?<\/strong> <p class=\"schema-faq-answer\">A share sale occurs when you sell the shares in your company to the buyer. The company owns all the assets and liabilities associated with your business. Therefore after completion of the sale, the buyer will own your entire business (through a company vehicle).<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1664068804372\"><strong class=\"schema-faq-question\">Do I retain my employees during an asset sale?<\/strong> <p class=\"schema-faq-answer\">As part of an asset sale, you will need to terminate the employment of all your employees with effect from the completion of the sale. You should work collaboratively with the purchaser during this process to ensure that, at the same time employees are given notice of termination, they are offered a new employment contract with the purchaser. If there are any key employees that the purchaser identifies as critical to the ongoing operation of the business, they may require that completion of the sale is conditional on those key employees accepting the offer of employment.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"3bc3beddae\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/217740\" \/>            <input value=\"https:\/\/legalvision.co.nz\/business-sale-and-purchase\/asset-vs-share-sale\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Asset Sale vs Share Sale in NZ\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A business sale is a significant decision that needs careful planning and consideration. When selling your business, you need to decide whether to structure the sale as an asset or a share sale. Each option has its own structure, and your choice depends on your business goals. However, most buyers prefer asset sales because it<a href=\"https:\/\/legalvision.co.nz\/business-sale-and-purchase\/asset-vs-share-sale\/\">Continue reading <span class=\"sr-only\">&#8220;Asset Sale vs Share Sale in NZ&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13316,"featured_media":215450,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"217690,206790,205950,207005,212512,1078","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[13],"tags":[25,54,663,1546,1572],"class_list":["post-217740","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-sale-and-purchase","tag-small-business","tag-medium-business","tag-asset-sale","tag-selling-business","tag-share-sale-2"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Asset Sale vs Share Sale in NZ | LegalVision NZ<\/title>\n<meta name=\"description\" content=\"Do you wish to sell your business in New Zealand? 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The company owns all the assets and liabilities associated with your business. Therefore after completion of the sale, the buyer will own your entire business (through a company vehicle).","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/business-sale-and-purchase\/asset-vs-share-sale\/#faq-question-1664068804372","name":"Do I retain my employees during an asset sale?","acceptedAnswer":{"@type":"Answer","text":"As part of an asset sale, you will need to terminate the employment of all your employees with effect from the completion of the sale. You should work collaboratively with the purchaser during this process to ensure that, at the same time employees are given notice of termination, they are offered a new employment contract with the purchaser. If there are any key employees that the purchaser identifies as critical to the ongoing operation of the business, they may require that completion of the sale is conditional on those key employees accepting the offer of employment.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/217740","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13316"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=217740"}],"version-history":[{"count":5,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/217740\/revisions"}],"predecessor-version":[{"id":228986,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/217740\/revisions\/228986"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/215450"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=217740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=217740"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=217740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}