Inland Revenue states that asset and share sales have different benefits and consequences for buyers and sellers and are treated differently for tax. The structure can also affect employees, contracts, licences, property, consents, liabilities, due diligence, completion steps, and post-settlement exposure.
Review this guide alongside the sale-readiness guide, valuation guide, NZ sale process, employee implications guide, and seller due-diligence checklist.
High-level comparison
| Issue | Asset sale | Share sale |
|---|---|---|
| What is sold | Specified assets and agreed liabilities. | 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, but its shareholders change. |
| Contracts | May need assignment, novation, consent, or new agreements. | Generally remain with the company, subject to change-of-control and other terms. |
| Employees | Can involve technical redundancy and offers from the buyer. | The employing company generally remains unchanged. |
| Liabilities | Allocated by law and agreement; not every exposure can necessarily be excluded. | Remain in the company whose shares are acquired, subject to contractual risk allocation. |
| Tax analysis | Depends on asset classes, allocation, tax values, market value, and other rules. | Different share-sale rules and seller circumstances apply. |
| Diligence focus | Transfer perimeter, title, assignability, consents, and assumed liabilities. | Whole-company history, assets, liabilities, tax, contracts, and contingent exposures. |
What happens in an asset sale?
The sale agreement identifies which assets transfer and which liabilities, obligations, contracts, employees, or arrangements the buyer assumes. The seller's legal entity may retain excluded assets and liabilities and may continue, change purpose, or later be wound up depending on the plan and advice.
Possible transferred items
- plant, equipment, vehicles, inventory, and other physical assets
- customer and supplier contracts, subject to transfer requirements
- intellectual property, domains, brands, data, and software rights
- property interests, leases, licences, permits, and approvals
- receivables, work in progress, deposits, and prepayments if agreed
- specified liabilities, warranties, obligations, and employee arrangements
Writing “all assets” is not a substitute for a controlled transfer schedule. Ownership, legal description, condition, location, finance, security interests, third-party rights, tax treatment, and completion delivery may need separate treatment.
What happens in a share sale?
The buyer acquires shares in the company. The company continues to own its assets, employ its people, owe its liabilities, and remain party to its contracts, subject to their terms and any legal or regulatory consequences of the ownership change.
Because the company carries its history, a buyer may conduct wider diligence and seek warranties, indemnities, conditions, escrow, retention, price adjustments, or insurance. A share sale can look mechanically simpler while still requiring detailed risk allocation.
Tax and asset-sale price allocation
Inland Revenue explains that an asset sale can include taxable revenue assets, depreciable capital assets, and non-taxable capital assets. The allocation of the purchase price affects the tax treatment of buyer and seller.
Where the parties agree an allocation, Inland Revenue says the agreed values should be used for tax purposes, subject to market-value rules and Inland Revenue's powers. Where parties do not agree, statutory allocation and notification rules can apply. Those rules include thresholds and deadlines that should be checked against the current guidance and your transaction.
Seller actions before agreeing allocation
- identify every relevant asset class and current tax treatment
- confirm tax book values, depreciation, cost, and available market evidence
- model seller and buyer consequences before signing
- make the allocation consistent across the sale agreement, accounts, and returns
- document the agreement and supporting basis
- confirm current Inland Revenue thresholds, deadlines, and notification requirements
Do not assume goodwill, shares, equipment, stock, receivables, land, intellectual property, or other assets receive the same treatment. Do not accept an allocation merely because it improves the other party's tax position.
Share-sale tax is not a one-line answer
Inland Revenue provides separate guidance on tax for business share sales. The outcome depends on the seller, purpose, history, company, transaction, and current tax rules. A statement that a share sale is “tax free” is not a safe basis for a transaction decision.
Ask a New Zealand tax adviser to address the seller entity, acquisition and ownership history, revenue-account issues, available capital, related-party matters, distributions, imputation, transaction costs, rollover or retained interests, and any post-sale payments.
Employees and employment process
Employment New Zealand explains that technical redundancy can arise in an asset sale where employment with the seller ends and employees are offered employment by the buyer. The seller must address notice and employment-agreement obligations, while the buyer provides proposed agreements to employees it offers to employ.
In a share sale, the employing company generally remains the same. That does not remove change-management, consultation, privacy, incentive, or retention considerations.
Every employment agreement must contain an employee-protection provision for relevant restructuring situations, and specified employees can have additional statutory rights. The detailed process depends on the people, work, structure, agreements, and timing. Use the NZ employee implications guide to prepare questions, then obtain employment-law advice before making promises or disclosing personal information.
Contracts, leases, and consents
In an asset sale, contracts may require assignment, novation, consent, notice, or replacement. In a share sale, contracts usually remain with the company, but change-of-control, ownership, credit, termination, and notification clauses may still apply.
Build a consent register
- agreement and counterparty
- legal entity and transaction structure
- assignment, novation, change-of-control, notice, and termination terms
- consent owner, dependencies, and confidentiality constraints
- required form, supporting information, and target sequence
- status, conditions, expiry, and completion evidence
Do not contact customers, suppliers, landlords, lenders, or regulators without an agreed sequencing and confidentiality plan.
Licences, permits, and regulatory approvals
Some licences or registrations attach to a legal entity, site, activity, or individual. An asset sale may require a new application or transfer process. A share sale may preserve the licence holder but still trigger notification, suitability, control, or approval requirements.
Map the issuing authority, holder, scope, expiry, conditions, ownership-change rules, required responsible people, application lead time, and consequences if approval is not ready at settlement.
Liabilities and seller exposure
An asset-sale agreement can state which liabilities the buyer assumes and which remain with the seller, but legislation, employee rights, creditor rights, tax, environmental obligations, product liabilities, and other rules may affect the result.
In a share sale, liabilities remain in the company. The buyer may seek protection through diligence, price, warranties, indemnities, conditions, escrow, retention, or insurance. The seller should assess liability caps, exclusions, claim periods, security, control of claims, and post-settlement access to records.
Working capital, debt, and seller proceeds
Neither structure tells you what the seller receives. The economic bridge can include cash, debt, shareholder loans, working capital, excluded or surplus assets, transaction costs, tax, escrow, deferred consideration, earn-outs, vendor finance, and rollover equity.
Define the valuation basis, accounting policies, reference period, target working capital, debt-like items, completion accounts, dispute process, and payment conditions. Compare complete risk-adjusted proceeds rather than only headline value.
How to evaluate the structure
- Define what the seller wants to transfer and retain.
- Map legal entities, assets, liabilities, contracts, employees, property, data, and licences.
- Model tax and cash consequences for each feasible structure.
- Identify consents, approvals, notices, applications, and employee steps.
- Compare diligence scope, completion complexity, and post-sale exposure.
- Negotiate the structure together with price, adjustments, conditions, and risk allocation.
- Document the agreed treatment consistently across all transaction records.