Asset Purchase versus Share Purchase

As a seller of a canadian business it is better to sell the shares of the company because:

• You can tap into the life capital gains exemption.

• You run less risk of holding all the liabilities that exist with a corporation

  • What happens a disgruntled old employee comes at the corp with a lawsuit.

An asset purchase is favoured by the buyer:

• They buy all the assets, the customers, the good will and IP

• But they don’t have any unwelcome surprises with liabilities of the corporation

• Also means they don’t have the overhead of dealing with a Canadian corporation

  • Gives them more flexibility with employment contracts and so on