Quick Summary
Business Transfer involves selling the entire business entity including all assets and liabilities, while Asset Transfer involves selling only specific assets of the business.
When selling a business, you can either transfer the entire business entity (slump sale or share transfer) or sell specific assets. Each method has different legal, tax, and compliance implications.
Methods of Business Transfer
- Share Transfer: Transfer company shares to new owner (business continues)
- Slump Sale: Transfer entire business undertaking as a going concern
- Asset Sale: Sell specific assets only
- Merger/Demerger: Combine or split business entities
Comparison: Share Sale vs Asset Sale
| Aspect | Share Sale | Asset Sale |
|---|---|---|
| Liabilities | All liabilities transfer | Seller retains liabilities |
| Contracts | Remain with company | Need novation |
| Employees | Continue employment | May need rehiring |
| Tax (Seller) | Capital gains | Business income/depreciation recapture |
| Due Diligence | Comprehensive required | Asset-specific |
Slump Sale
- Transfer of entire business undertaking
- Sold as going concern
- Values assigned to lump sum consideration
- Tax: Capital gains for seller
- Requires business valuation
Key Points
- Share sale transfers entire company
- Asset sale transfers specific items only
- Slump sale transfers undertaking as going concern
- Different tax implications
- Due diligence scope differs