Acquisition structures: comparing asset purchases and share purchases

by Practical Law Corporate

A practice note that provides an overview of the two principal methods for acquiring a business in the UK: an asset purchase and a share purchase. The note explores the fundamental legal and commercial differences between these transaction structures, which parties must consider when deciding how to proceed with a corporate acquisition. It contrasts the flexibility of an asset purchase, which allows a buyer to "cherry-pick" desired assets and avoid unwanted liabilities, with the structural simplicity of a share purchase, where the buyer acquires the target company complete with all its assets and liabilities, whether known or unknown. Key issues influencing the choice of structure are examined, including transfer formalities, the need for third-party consents, and shareholder involvement. This note also highlights important regulatory considerations such as the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the financial assistance rules under the Companies Act 2006 (CA 2006), and the financial promotion regime.