Encyclopedia
Asset sale
Selling a business by selling its assets, such as equipment, inventory, goodwill and the lease, rather than the shares of the company. The seller's company keeps its liabilities.
For example: A buyer of a bakery agrees to buy the ovens, recipes, name and lease, but not the company, so old debts stay with the seller. (Illustration only, not a real deal.)
Official source: Income Tax Act (Justice Laws)
Example only, not a real client. Say you are buying a business and its building. In an asset sale, you buy the property and selected assets directly, not the company. You leave behind most of the seller’s past liabilities, though you may pay property transfer tax.
What I’d tell a friend
An asset sale is often cleaner for a buyer. Compare it with a share sale with your lawyer and accountant.
Why it matters to you
It changes who keeps what after tax and what the buyer takes on. Buyers usually prefer an asset sale because they leave the old company's history behind, while sellers often get a better tax result from a share sale, so the structure is part of the price.
How to use it in your deal
Buyers often prefer asset sales because they can choose what to take on and get a higher tax cost for depreciation. Allocate the purchase price among land, buildings, equipment and goodwill, since it affects taxes for both sides; get advice. Property transfer tax applies to real estate, and Goods and Services Tax (GST) may apply unless an election under the tax rules fits.
Contracts, leases, licences and permits may need consent or new applications. Employees may need new offers, and employment law obligations may carry over. Search the Personal Property Registry for liens on equipment. Sellers may prefer share sales for tax reasons, so price may reflect structure.
Do a bulk equipment inspection and inventory count close to closing, and adjust the price if things have gone missing. Change the business name registration, accounts, insurance and licences into your name before day one, so customers see no gap.
Mistakes I see
Missing consents. Poor price allocation. Ignoring liens.
In BC and Vancouver
The Income Tax Act, Property Transfer Tax Act, Excise Tax Act and Personal Property Security Act apply.
Official sources: Income Tax Act (Justice Laws) · Property transfer tax (Government of BC) · Excise Tax Act (Justice Laws) · Personal Property Security Act (BC Laws)
What it is
In an asset sale, the buyer purchases specific assets, such as land, buildings and equipment, rather than the shares of the company that owns them.
The seller’s company keeps its own liabilities, unless the buyer agrees to take some on.
What to weigh
Taxes, including property transfer tax and GST, can differ between asset and share sales.
Due diligence also differs. In an asset sale you check the property and the assets; in a share sale you also check the company’s history.
Get advice from a BC lawyer and accountant on structure.
Questions to ask before you sign
- Which assets are included?
- How is price allocated?
- What consents are needed?
- Are there liens?
Keep reading
Related terms: Share sale, Goodwill, GST going-concern election, Provincial Sales Tax (PST) clearance certificate
- Sale-leaseback for BC business owners
- Selling a business that owns or leases its real estate in BC
- Asset sale or share sale for a BC business in 2027
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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.