Jurisdiction(s):
United Kingdom

Key definition

Share purchase definition

What does Share purchase mean? A share purchase is the acquisition of shares in a target company—typically all, or a controlling stake—so the buyer becomes the shareholder exercising control while the company continues to own its business. Because the company remains the legal owner of its assets and bearer of its obligations, the buyer effectively inherits the company with all assets, contracts and liabilities (including unknown or contingent liabilities), managed through due diligence, warranties, indemnities and price adjustments. Used across private M&A, it is usually documented by a share purchase agreement (SPA) and completed by share transfers and corporate approvals, with any required...

Structuring private company acquisitions: choosing share versus asset purchases and managing auction sales, with key tax, due diligence and process considerations

Published by a LexisNexis Corporate expert

Practice notes

This Practice Note forms part of the Share purchase transaction collection.

At the start of a Private company M&A deal, aside from price, the central question for the parties and their advisers is ultimately the transaction structure to be adopted at the outset. Will the buyer take the whole Issued share capital of a company (a share purchase), or instead buy a trading business as a going concern, together with only certain selected assets (an asset purchase)? Another key question, to be settled at an early stage, is whether the seller is negotiating solely with one bidder, or entertaining multiple approaches within an auction sale process. Running an auction sale also entails a different procedure and overall timetable when compared with a standard transaction involving just one potential buyer.

Share purchase or asset purchase?

A privately owned company or business can be acquired either by means of a share purchase or an asset purchase. On completion of a share purchase, by acquiring its shares the buyer thereby assumes ownership of the company operating the business (the target company), together with all of its assets, obligations and liabilities in full, whether or not the buyer was aware of them. Under an...

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Web page updated on 22/05/2026

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