Asset vs. Share Purchase in Australia: Making Informed Business Decisions

Asset vs. Share Purchase in Australia: Making Informed Business Decisions


When it comes to acquiring or selling a business in Australia, one of the most critical decisions to make is whether to opt for an asset purchase or a share purchase. Each method has its own set of advantages and disadvantages, and the choice you make can significantly impact the outcome of the transaction. In this blog, we will explore the differences between asset and share purchases in the Australian context to help you make informed decisions regarding your business transactions.

Asset Purchase

  1. What is an Asset Purchase?

An asset purchase involves acquiring the individual assets and liabilities of a business rather than purchasing the shares of the company itself. These assets can include physical assets (e.g., real estate, equipment, inventory), contracts, intellectual property, and goodwill. Liabilities assumed in an asset purchase are typically limited to those explicitly specified in the purchase agreement.

  1. Advantages of Asset Purchase

a. Limited Liability: Asset purchases allow the buyer to control which liabilities and obligations they assume, providing a level of protection against unknown or undisclosed liabilities.

b. Depreciation Benefits: The buyer can allocate the purchase price to specific assets, which can result in potential tax benefits through depreciation deductions.

c. Flexibility: Asset purchases can be more flexible, allowing the buyer to choose which assets to acquire and which to leave behind.

  1. Disadvantages of Asset Purchase

a. Higher Transaction Costs: Asset purchases often involve more paperwork and legal complexities, which can increase transaction costs.

b. Contract Transfer: Contracts with suppliers, customers, and employees may require renegotiation or consent, adding complexity to the transaction.

Share Purchase

  1. What is a Share Purchase?

A share purchase involves buying the shares of a company, making the buyer the owner of the entire business, along with all its assets, liabilities, contracts, and obligations. The company structure remains intact, with new ownership.

  1. Advantages of Share Purchase

a. Simplicity: Share purchases are generally simpler and involve fewer legal formalities compared to asset purchases.

b. Continuity: Business operations and existing contracts typically continue without interruption, as the company remains intact.

c. Tax Benefits: In some cases, a share purchase can be more tax-efficient, as it may provide access to capital gains tax concessions.

  1. Disadvantages of Share Purchase

a. Unknown Liabilities: Share purchasers may inherit unknown or undisclosed liabilities, potentially exposing them to greater financial risk.

b. Less Control: The buyer may have limited control over which assets and liabilities they acquire, as they come as a package deal with the company.

Considerations for Asset vs. Share Purchase in Australia

When deciding between an asset and share purchase in Australia, consider the following factors:

  1. Due Diligence: Thoroughly assess the financial and legal health of the business, especially in a share purchase, to identify potential liabilities and risks.
  2. Tax Implications: Consult with tax professionals to understand the tax consequences of each option, as Australia’s tax laws can impact your decision.
  3. Third-Party Consents: Consider whether key contracts, leases, and agreements require third-party consents for transfer in an asset purchase.
  4. Continuity: Think about the continuity of the business and whether you want to maintain the existing brand and relationships.
  5. Risk Tolerance: Assess your risk tolerance and determine how comfortable you are with inheriting the company’s obligations in a share purchase.


In Australia, the choice between an asset purchase and a share purchase is a significant decision when buying or selling a business. Each method comes with its own set of advantages and disadvantages, and the decision should be based on factors such as tax implications, due diligence, and your business goals. It is crucial to seek professional advice from lawyers, accountants, and financial experts to make the most informed decision that aligns with your specific circumstances and objectives. Ultimately, understanding the nuances of asset and share purchases will empower you to make the right choice for your business transactions in the Australian market.

AveSol Accounting can assist with this.


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