If you’re a founder, business owner or investor looking to grow, restructure or exit a business, acquiring or selling another company may be on your radar. But navigating the right deal structure can be complex, especially if you're unfamiliar with the options available.
This guide explains what a share acquisition involves, how it compares to an asset purchase, and when it’s the right choice. Whether you’re expanding through acquisition or planning a clean exit, our M&A lawyers understand the legal and commercial implications and highlight the importance of early-stage legal advice.
Contents:
What is a share acquisition?
A share acquisition is when one person or company buys shares in another company, usually enough to take control of it. Instead of buying individual assets like equipment, contracts, or stock, the buyer takes ownership of the whole business by purchasing its shares from the current owners.
It’s a bit like buying a fully furnished house. You don’t just get the bricks and mortar, you get everything inside, including the furniture, the contents of the fridge, and even the existing utility bills. In the same way, a share acquisition gives the buyer full ownership of the target business, along with its assets, liabilities, staff, contracts, and brand.
For example, if you were acquiring a chain of independent cafés via a share acquisition, you wouldn’t need to transfer each lease or renegotiate every supplier agreement. You’d simply become the new owner of the company that already holds those arrangements allowing the business to keep running with minimal disruption.
That’s one of the main benefits: continuity.
- Customer and supplier contracts often stay in place (unless they include a 'change of control' clause).
- Employees remain employed by the same company, so there's usually no need to reissue contracts.
- The company’s name, reputation and legal identity stay intact, which can help preserve goodwill and trust.
Because of this, share acquisitions are often smoother operationally than asset sales, where each part of the business may need to be transferred individually. For buyers looking to take over a trading business with minimal friction, or sellers wanting a clean break, a share deal can be an efficient route.
That said, share acquisitions do come with more legal complexity, especially around due diligence and risk. You’re buying the whole business, liabilities and all. So, it’s essential to understand exactly what you’re getting. That’s where strong legal support becomes crucial, even in the early stages.
How does a share acquisition differ from an asset purchase?
When it comes to buying or selling a business, there are two main routes: a share acquisition and an asset purchase.
While they can both achieve a similar outcome, the legal and commercial mechanics are quite different.
In a share acquisition, the buyer purchases shares in the company under the terms of a share purchase agreement. They acquire the entire business entity, including its assets, contracts, staff, liabilities, and trading history. The company itself doesn’t change, it simply has new shareholders.
In an asset purchase, the buyer selects specific assets and rights they want to acquire such as stock, equipment, customer lists, intellectual property, or leaseholds. The selling company keeps everything else, including any liabilities not expressly transferred. This can be a more targeted approach, but it also tends to involve more administrative effort.
Here’s a quick comparison:
| Share Acquisition | Asset Purchase |
| Buyer takes control of the entire company | Buyer picks and chooses which assets to buy |
| Contracts and employees often stay in place | Contracts may need to be re-assigned |
| Liabilities transfer with the company | Buyer can avoid unwanted liabilities |
| Typically more legal complexity upfront | Typically more administrative complexity |
| Suitable for buying a trading company | Suitable for cherry-picking assets or intellectual property |
A share acquisition is often the preferred route when the target is a well-run, operational business with valuable contracts, staff, and brand equity. It’s also useful when continuity matters, such as retaining key clients or regulatory licenses.
An asset purchase may be more appropriate if the buyer wants to avoid taking on liabilities, or if the business is distressed and the aim is to acquire only the valuable parts.
For example, if you were buying a small tech startup for its IP and development team, but didn’t want its office leases or historic debts, an asset purchase could let you carve out just what you need. On the other hand, if you're acquiring a growing business with solid revenue and long-term customer contracts, a share deal might offer a smoother transition.
Ultimately, both options have their place. The right choice depends on the nature of the business, the deal dynamics, and the level of risk you're prepared to accept, something a corporate lawyer can help you navigate early in the process.
Who is a share acquisition suitable for?
Share acquisitions can be a powerful tool for a range of business goals, from rapid expansion to exit planning. While no two deals are the same, there are several common scenarios where a share acquisition makes sense.
Business owners looking to grow through acquisition
If you want to expand into new markets, add complementary services, or acquire a ready-made customer base, buying an existing company can be faster and less risky than building from scratch. A share acquisition gives you immediate access to everything the business has built, its people, reputation, systems and contracts, all in one move.
For example, a regional logistics firm might acquire a smaller competitor to expand its footprint and gain new delivery routes. Rather than negotiating the transfer of every asset, a share acquisition lets the buyer step straight into the existing structure and keep operations running without interruption.
Founders planning an exit
For business owners looking to step back or retire, selling the company via a share acquisition can offer a cleaner, more complete exit than selling assets piecemeal. The buyer takes over the entire company, and the seller walks away (subject to any agreed transitional arrangements).
This route is particularly appealing for sellers of owner-managed businesses where continuity is key, especially if the buyer wants to retain staff, preserve customer relationships, or maintain the brand.
Investors exiting or restructuring
In private equity or venture-backed businesses, share acquisitions are commonly used as part of an investor exit or restructuring. When one investor group sells its shares to another, the transaction often takes the form of a share purchase, leaving the company itself untouched.
Group reorganisations and internal transfers
Larger businesses may use share acquisitions as part of an internal restructuring, for example, moving subsidiaries between different parts of a group. These are often tax-driven or designed to simplify ownership structures, and although no money may change hands, the legal process is much the same.
In short, share acquisitions can suit buyers who want the whole business with minimal operational disruption, and sellers who want a clean and complete transfer. The key is knowing what you’re buying, and making sure it’s protected by the right legal structure.
What does the process involve?
Although every deal is different, most share acquisitions follow a similar path. From early discussions and due diligence to final completion, there are several key stages, each with its own legal, commercial and practical steps.
A share acquisition can either be direct between two parties, or via an auction process where bidders compete to acquire the business. In both scenarios, the main elements of the process are the same, namely confidentiality, due diligence and the negotiation of the contracts.
A brief overview of the sale process is as follows:
| Bilateral Process | Auction Process |
| Initial contact is made | Initial contact is made |
| Confidentiality and exclusivity | Confidentiality |
| Deal team assemble: lawyers, accountants, tax specialists, business managers | Deal team assemble: lawyers, accountants, tax specialists, business managers |
| Access to initial confidential data | Access to initial confidential data |
| Heads of terms | Indicative bids |
| Due diligence process; access to data | Due diligence process: Access to data room and to draft documentation |
| Draft documentation provided by sellers | Submit final bid and marked up documentation |
| Negotiation of sale documentation | Negotiation of sale documentation |
| Signing of sale documentation | Signing of sale documentation |
| Interim period | Interim period |
| Completion | Completion |
| Post completion warranty claims | Post completion warranty claims |
Depending on the complexity of the business and how well-prepared both parties are, this process can take anywhere from a few weeks to several months.
It’s worth noting that while some stages, like heads of terms, can feel informal, the decisions made early on often shape the final deal. Having legal input from the start helps ensure the process runs smoothly, the right protections are in place, and you’re not caught out by overlooked risks.
For a more detailed guide on the legal steps involved, see How to prepare for a share acquisition.
What are the risks and challenges?
While share acquisitions can be an efficient route to growth or exit, they aren’t without complications. Because the buyer is taking over the entire company, including all its obligations, it’s essential to understand and manage the risks from the outset.
Here are some of the most common challenges founders and business owners face:
Hidden liabilities
When you buy the shares in a company, you inherit everything it owns and everything it owes. That includes debts, unresolved disputes, tax issues, or even outdated employee contracts. If these aren’t spotted during due diligence, they can become your problem after completion. For example, we’ve seen cases where buyers discovered historic underpaid tax liabilities months after the deal closed. These could have been picked up and potentially covered by an indemnity if the due diligence and disclosure process had been more thorough.
Complexity and negotiation
Share acquisitions tend to involve more complex legal documentation than asset purchases. Negotiating the terms of the Share Purchase Agreement (SPA), agreeing warranties and indemnities, and managing the disclosure process all take time and the devil is often in the detail. The negotiation process can also be delicate. Sellers may want a clean break; buyers want strong protections. Balancing those positions, especially when trust or time is limited, requires a steady legal hand.
Time and cost
These deals often take longer and cost more than people expect. Legal, financial and tax advisers are all usually involved, and with good reason. Trying to cut corners here often leads to more expensive problems later. The process can also be distracting. Founders managing day-to-day operations while navigating a deal may find their attention stretched, particularly if the transaction drags on or hits snags.
Change of control issues
Some key contracts, especially with suppliers, landlords or customers, may include 'change of control' clauses. These give the other party the right to walk away if the company is sold. If these clauses aren’t identified early, you could find yourself owning a business without the relationships that made it valuable.
Integration risks
Even when the legal deal goes smoothly, integrating a new business into your existing operations can be difficult. Cultural clashes, incompatible systems, or unexpected resistance from staff can all undermine the strategic rationale for the deal.
The good news is that most of these risks can be managed with proper planning and legal advice. Spotting the pitfalls early, negotiating clear protections, and staying realistic about what the deal can deliver will give you a much better chance of success.
Do I need legal support?
In a word: yes.
Even in straightforward cases, share acquisitions involve legal complexity that most founders simply won’t have the time or inclination to unravel on their own. From the moment you start considering a purchase or sale, having a lawyer in your corner can help you spot risks early, shape a better deal, and avoid common (and costly) missteps.
Good legal advice doesn’t just kick in at the contract stage. It helps you ask the right questions from the outset:
- Is a share acquisition the right structure, or would an asset purchase make more sense?
- Are there change-of-control clauses that could derail key relationships?
- What kind of protections should you be negotiating, warranties, indemnities, or retention mechanisms?
Legal advisers also handle the paperwork, but just as importantly, they manage the pace and flow of the deal. They’ll coordinate with your accountant, flag regulatory hurdles, and make sure nothing is left to chance when completion day arrives.
Put simply, early legal input saves time, reduces risk, and can mean the difference between a deal that adds value and one that creates problems.
Next steps if you're considering a share acquisition
If you're starting to explore growth or exit options and think a share acquisition might be right for your business, now’s the time to start a conversation.
A good first step is to speak to a corporate lawyer who can help you weigh up your options, explain the legal implications, and map out what the process might look like in your situation.
You can also read our practical guide on How to legally prepare for a share acquisition, which covers the key legal steps in more detail, from due diligence to post-completion protections.
And if you're ready to take the next step or just want to talk through your goals we're here to help.
