An asset sale involves procuring assets from a target corporation and dumping these assets into a new corporation belonging to the buyer, while a share sale transfers ownership of the corporation to the new buyer. In a share sale, all assets, contracts and liabilities within the corporation remain unaffected. The new shareholder has simply stepped into the shoes of the prior shareholder.
In 2025, a share sale may be more tax-efficient for sellers who can use the Lifetime Capital Gains Exemption, while an asset sale can sometimes provide buyers with tax advantages through increased depreciation of purchased assets.
In an asset sale, buyers can choose which liabilities to assume. In a share sale, the buyer inherits all existing liabilities of the corporation however these liabilities can be shifted back to the seller under indemnification provisions in the purchase agreement.
Yes. In an asset sale, the purchase price is allocated among assets like inventory, goodwill, and equipment. In a share sale, the purchase price applies to the company’s shares as a whole.
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A seller may prefer an asset sale if he has no available Lifetime Capital Gains Exemption (LCGE) room, the corporation is not eligible for the LCGE (for example, owner has held shares for less than 24 months or corporation has passive assets), or there is a large capital loss inside the corporation which will shelter the cap gain on an asset sale. A buyer may prefer an asset sale to separate out unwanted liabilities, have control over the allocation of the purchase price and future depreciation of the assets, sell only part of the business, or make the purchase more attractive to buyers concerned about hidden obligations
