High-level comparison
| Issue | Asset sale | Share sale |
|---|---|---|
| What is sold | Specified assets and agreed obligations. | Shares in the company that owns and operates the business. |
| Legal entity | The buyer may operate through a different entity. | The operating company remains the same entity while ownership of its shares changes. |
| Contracts | May need assignment, novation, consent, or replacement. | Remain with the company, subject to change-of-control, notice, consent, and termination terms. |
| Employees | May involve a transfer of business, offers from a new employer, or employment ending. | The employing company generally remains the same, although later workplace changes need separate analysis. |
| Liabilities | Allocated by law and agreement. Not every exposure can necessarily be excluded. | Remain in the company, with contractual risk allocation between buyer and seller. |
| Diligence | Focuses on the transfer perimeter, title, consents, and assumed obligations. | Examines the company's history, assets, liabilities, tax, contracts, and contingent exposures. |
What changes in an asset sale?
The agreement identifies which plant, stock, intellectual property, contracts, property interests, data, receivables, licences, and other assets transfer. It also identifies assumed and excluded obligations.
Business.gov.au tells sellers to decide exactly what is included. An asset description must be supported by ownership, condition, location, finance, security interests, third-party rights, tax treatment, and completion schedules.
ASIC treats a registered business name as a separate registration. If the new owner wants to use the name, the current holder starts the transfer process. That process does not transfer the other assets or obligations.
What changes in a share sale?
ASIC explains that a share is part ownership of a company and that shareholders do not own the company's assets. In a share sale, the buyer acquires shares while the company continues to hold its assets, contracts, employees, and liabilities, subject to specific terms and legal consequences.
Because the company carries its history, a buyer may conduct wider diligence and seek warranties, indemnities, conditions, escrow, retention, price adjustments, or insurance. Mechanical transfer of shares does not remove transaction risk.
Tax structure requires transaction-specific modelling
Business.gov.au states that CGT and GST may apply to a business sale, that GST may need to be included in the price of individual assets for a GST-registered business, and that small-business CGT concessions may be available.
These are starting points, not a transaction answer. The outcome can depend on the seller, ownership history, entity, asset classes, tax values, allocation, GST status, concessions, related parties, consideration, and current law.
Ask an Australian tax adviser to model each feasible structure before signing preliminary or final terms. Do not describe an asset sale or share sale as automatically tax-free or tax-preferred.
Employees, contracts, data, and licences
Business.gov.au says employees may transfer to the new business or their employment may end, and awards or enterprise agreements can add consultation or other requirements. The Fair Work transfer-of-business rules and employee entitlements require fact-specific review.
In an asset sale, contracts may require assignment, novation, consent, or replacement. In a share sale, the company remains the contracting party, but change-of-control or ownership clauses can still apply.
OAIC APP 6 limits how an APP entity may use or disclose personal information. Identify the purpose and legal basis before giving a buyer employee, customer, or other personal information. A confidentiality agreement does not replace privacy analysis.
Licences can attach to an entity, person, site, or activity. Check each Commonwealth, state, territory, and local regulator rather than assuming a national transfer rule.
Compare complete seller risk and proceeds
Neither structure tells you what the seller receives. Review cash, debt, shareholder loans, working capital, excluded assets, tax, costs, escrow, deferred consideration, earn-outs, vendor finance, rollover equity, warranties, indemnities, and post-completion obligations.
- Define what transfers and what remains.
- Map entities, assets, liabilities, contracts, employees, property, data, and licences.
- Model tax and cash consequences.
- Identify notices, consents, approvals, and employee steps.
- Compare diligence, completion complexity, and post-sale exposure.
- Negotiate structure together with price, adjustments, conditions, and risk allocation.
Review this guide with the Australian employee guide and sale-process guide.