Private M&A: share purchase basics

A business may be acquired by one of two methods:

1. •

   asset purchase, or

2. •

   share purchase

Under an asset purchase, the buyer selects the assets and liabilities it wishes to acquire from the seller and purchases them directly. Under a share purchase, the buyer takes over ownership of the company carrying on the business (the target), which comes with all of its assets, obligations and liabilities (whether or not the buyer was aware of them).

This overview provides an insight into acquisitions by private companies, made by way of purchasing shares by private agreement, for commercial lawyers who may be required to assist in connection with a share purchase or share sale transaction. It is not a comprehensive guide or set of documentation for a share purchase or sale. For more detailed guidance and documentation relating to share purchase and sale agreements, see:

1. •

   General issues (share purchase)—overview

2. •

   Preliminary documents (share purchase)—overview

3. •

   Due diligence and disclosure (share purchase)—overview

4. •

   Share purchase agreement—overview

5. •

   Ancillary documents (share purchase)—overview

6. •

   Auction sale (share purchase)—overview

7. •

   Completion and post-completion (share purchase)—overview

8. •

   Cross-border (share purchase)—overview