Share sale
A share sale is a transaction where the buyer purchases the shares of the corporation that carries on the business, acquiring the company whole — assets, contracts, and liabilities together. The business itself does not change hands; its ownership does.
Because the corporation continues to exist, a share sale is usually the cleaner structure operationally. Contracts, leases and many licences stay with the company rather than needing to be assigned, and employment generally continues uninterrupted because the employer has not changed.
Why sellers push for it
Share sales are frequently more tax-efficient for Canadian sellers, because gains on qualifying small business corporation shares may access the lifetime capital gains exemption. That single difference is often worth more to a seller than several points of purchase price, which is why a seller may accept a lower headline number in exchange for a share structure.
Why buyers resist it
- The buyer inherits the company’s liabilities, including ones nobody has discovered yet
- Tax arrears, unpaid source deductions and past filings follow the corporation
- Diligence is broader and slower, because the whole corporate history is in scope
- Change-of-control clauses in contracts and leases can still be triggered by the share transfer
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentSelling a business
- 02Treadstone LawLegal commentaryHow the Lifetime Capital Gains Exemption Shapes the Asset vs Share Decision in Ontario
- 03Treadstone LawLegal commentaryBuying & Selling a Business
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