Business Sale VS. Company Sale: What is the difference?

As a potential business purchaser, buying a company and buying a business may sound similar, however, there are aspects that make the two options quite different.

Business Sale

When compared to a company sale, a business sale is generally more straightforward. By entering into a Sale of Business Agreement with a potential purchaser, the business is transferred to new ownership. 

In a successful business sale, the following occurs once the purchaser has agreed to buy the business:

  • A deposit is paid by the purchaser
  • The landlord of the premise(s) must approve the purchaser as the new tenant
  • Settlement will occur when all parties are happy and have come to an agreement
  • At this point, the remainder of the purchase price will be paid by the purchaser and the sale is finalised, meaning that the business name and assets are transferred into the purchaser’s name

Company Sale

A major difference between a business sale and a company sale are shares

When a company is sold, the shares in that company are sold, alongside any business currently operated by said company.

For example, ‘Green Pty Ltd’ own’s the business ‘Red Coffee’. Therefore, if ‘Green Pty Ltd’ is sold, the purchaser not only owns the company but the business ‘Red Coffee’ as well.

When buying a company, as with any type of legal business transaction, we advise you seek the assistance of a professional to aid in the buying process. 

However, things to keep in mind consist of, and are not limited to:

  • What percentage shareholding is being sold?
  • Are there any other shareholders remaining in the company?
  • Does the company have any debts or liabilities present? As these may transfer to the new purchaser

The transfer of company ownership can be more complicated than business ownership. It is vital that the Seller complies with all requirements of ASIC when selling the company. Other documents such as the Deed of Share Sale and Release are used and there are many aspects that need to be considered.

GMO highly recommends the employment of professional business and legal services when dealing with either of the above scenarios. If you are considering purchasing a business OR a company, contact the office on (08) 9481 4422, Graham O’Hehir and the team have a great deal of experience and knowledge that they are always happy to share.

Buying or selling a business in Western Australia with GMO Business Brokers

With over 3500 successful sales to our name, GMO business brokers has grown to become Western Australia’s preferred business broker. When looking into buying a business in Perth or elsewhere in our state you will be assigned an experienced business broker to guide you through the process of buying a business or selling a business in WA. GMO’s business brokers are each specialized in their own business sector which makes that you always have someone on your side who is highly knowledgeable about the industry you are looking to buy into. We have a broad range of businesses for sale in Perth and beyond, please contact us to answer any questions you might have.

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