In an asset purchase transaction, the buyer acquires specific assets and liabilities of the business rather than purchasing the company’s shares. This approach allows the buyer to selectively choose which assets to acquire and which liabilities to assume, potentially minimizing exposure to unwanted obligations. Commonly included assets are inventory, equipment, intellectual property, and customer lists. In Canada, asset purchases may offer tax advantages, such as the ability to allocate the purchase price to depreciable assets, potentially resulting in favorable tax treatment. However, this type of transaction typically requires extensive documentation and may involve more complex negotiations, especially concerning the assignment of contracts and leases.

A share purchase transaction involves buying the shares of the target company, resulting in the acquisition of the entire business, including all its assets and liabilities. This method can be simpler from an operational perspective, as the business continues to operate without interruption, and existing contracts, permits, and licenses usually remain intact. In Canada, share purchases may be more straightforward from a legal standpoint since there is no need to reassign assets or renegotiate contracts. However, buyers must conduct thorough due diligence to identify any hidden liabilities, such as outstanding debts or legal issues, which they will inherit with the purchase.

Extensive Expertise in Business Law

With a strong academic and practical background, we provide thorough legal advice tailored to your specific needs.

Tax and Employment Law Insight:

We understand the tax implications and employment law considerations involved in asset and share purchases, ensuring that your transaction is structured efficiently and compliantly.

Comprehensive Support

From initial negotiations to finalizing the deal, we offer end-to-end support to make the process as smooth as possible.