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A business podcast for Canadian entrepreneurs who want to build their business on a solid legal foundation.
Weighing the Pros and Cons: Buying Assets vs. Shares in a Company
The Legalmybiz.ca Podcast
19 minutes
1 year ago
Weighing the Pros and Cons: Buying Assets vs. Shares in a Company
I’ve been getting a lot of questions the last number of months about buying and selling a business, sometimes from current owners with successful businesses who are looking ahead to sell, and also from people wanting a business who are wondering if they should start from scratch or buy an existing one. That’s why in this episode, I want to explore these topics and share what you should know about buying an existing business. Specifically, I want to discuss the difference between buying and selling shares and assets, as this is an important distinction that you will need to be aware of if you’re considering buying or selling an established business. Today you’ll hear about:
The key points of difference between buying shares and buying assets of a company
The ways in which business brokers can help in this process and what you should leave to your accountant or lawyer instead
Why sellers prefer to sell shares and buyers prefer to buy assets and how you can work this out
How to negotiate the necessary legal agreement for selling shares versus buying assets
The reasons that a buyer takes on more risk when purchasing shares and what to understand about due diligence and representations
As you’ll hear, when selling or buying a company, preparation is key. This is especially true if you are selling, and you need to be thinking about this several years in advance. It’s very important for you to be working with your accountant, and to consider what role a business broker should play or not play, in this process. I hope this conversation helps shed some light on what’s really involved in this type of transaction, and it gives you some things to consider about buying assets versus shares in a company.
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