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What Is A Share Sale?
A buyer has two main options when it comes to purchasing a company. In 2025, you can either buy the company through a share sale or opt for an asset sale, each with its own advantages and implications.
A share sale involves the transfer of shares in a company – meaning that when you purchase the shares, you acquire not only the business’s assets but also its liabilities and debts. Essentially, you step into the shoes of the existing shareholders.
On the other hand, an asset sale allows you to selectively purchase the company’s assets, such as client lists, trade marks, goodwill, etc., without taking on unwanted liabilities. This distinction is vital when planning your acquisition strategy.
How Does The Process Work?
The process typically depends on whether you’re acquiring all or just a portion of the company’s shares:
- When you’re selling all of the company’s shares
- When you’re only selling a portion of the company’s shares
If only a portion of shares is being sold, the buyer would need to enter into a Shareholders Agreement with the existing shareholders. This arrangement can be executed through a Deed of Accession-which allows new shareholders to join the existing agreement without requiring every current shareholder to re-sign-or by drafting a new Shareholders Agreement. For further guidance on structuring these agreements, check out our detailed guide on Shareholders Agreements.
A Deed of Accession is particularly advantageous as it binds you to the terms of the existing agreement without the administrative hassle of re-signing. In contrast, a new Shareholders Agreement would require all shareholders (both current and incoming) to execute the document. With recent digital advancements and updated ASIC online processes in 2025, these procedures have become more efficient and secure.
What Do I Need To Think About During A Share Sale?
Firstly, if you’re a buyer, it is vital to conduct thorough due diligence to minimise risks. In 2025, this means reviewing financial statements, legal records, and verifying digital data through ASIC’s updated systems to understand fully any liabilities, debts, or regulatory issues associated with the company.
It is also important to determine what type of shares you’re purchasing or selling. Shares may differ in voting rights and dividend preferences, and understanding these distinctions is crucial to ensure you obtain the control and benefits you expect.
If applicable, it’s essential to review the existing Shareholders Agreement or Company Constitution to ensure the share sale complies with any pre-existing obligations. For example, some documents may include a right of first refusal, meaning existing shareholders must be offered the shares before they can be sold to external parties.
Key Terms To Include In A Share Sale Agreement
To ensure a smooth transaction, your Share Sale Agreement should address several key points, including:
- Shares: Detail the exact number and type of shares being acquired, as this determines your voting power and rights within the company.
- Price: Clearly state the purchase price for the shares, ensuring that both parties agree on the total transaction value.
- Completion: Specify when, where, and how the shares will be transferred – including details such as signed transfer forms and updated share certificates.
- Pre-Sale Conditions: Outline any conditions that must be fulfilled before closing the deal, such as confidentiality obligations or commitments to retain key employees.
- Warranties and Indemnities: Include representations about the business and the shares. If any warranties are breached, the buyer may be entitled to compensation or even termination of the agreement.
- Restraints and Non-Competes: In cases where all shares are being sold, the agreement might include clauses restricting the seller’s future activities, such as non-compete, non-poaching, or non-solicitation provisions. For further reading on these topics, see our overview of non-compete agreements.
- Dispute Resolution and Termination Procedures: Establish clear methods for resolving any disputes and outline the consequences or remedies should the agreement be terminated.
Additionally, consider including provisions on Governing Law and Closing Adjustments. Governing Law specifies the jurisdiction under which the agreement will be interpreted, while Closing Adjustments allow for any post-completion recalculations if additional liabilities or changes in value emerge. With electronic contracts now fully recognised in 2025, incorporating e-signature clauses has become standard practice, streamlining the finalisation process.
Need A Lawyer?
Whether you’re deciding between an Asset Sale or a Share Sale, it’s invaluable to speak with a lawyer who understands the latest legal developments and digital innovations in 2025. Our expert team is ready to help ensure all ASIC obligations and contractual details are handled efficiently.
Getting your Share Sale Agreement in order from the outset can save you time and trouble later. For more detailed advice, take a look at our guide on choosing the right lawyer to assist you, and ensure your transaction complies with all current legal standards.
Don’t hesitate to give us a call on 1800 730 617 or email us at team@sprintlaw.com.au for a free, no-obligation chat about your share sale arrangement in today’s evolving market.
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