Asset Sale vs Share Sale: How to Structure the Sale of Your Agency

The first thing a customer notices about a sale is usually an invoice.

On one asset sale we did, the monthly payment run fell two days before settlement. Then a payment processor token issue paused it.

The cards on file didn't get charged, but invoices still went out manually, under the old ABN.

We had to go back to every one of those customers. We voided the invoice and reissued it under the new ABN.

It was painful, especially for customers. You pay $100 to $300 a month for your website. You get an invoice, then a voided invoice, then a new one from a business you don't recognise.

Customers were confused and frustrated: "What is this about?" It was a bad first impression.

The deal still closed. Sorting out that month got negotiated away in the final hour, and the billing became our problem to fix after settlement.

By the time it was fixed, it was too late to run that month's billing. So we gave those customers the month free.

And we turned it into a welcome. We'd improved our billing system, we'd made a change last month, don't worry about it, it's on us. Thanks for working with us.

In an asset sale, every change is a chance for a customer to leave.

That's an asset sale. In a share sale, none of it happens, because nothing moves.

So which one should you choose? It's one of the bigger calls in How to Sell Your Business, especially when most of what you're selling is recurring revenue.

This is written for Australian founders. In the US, a share sale is usually called a stock sale. Same idea, different tax rules.

And I'm not a lawyer or an accountant. Treat this as the questions to take to your advisers.

What's the difference between an asset sale and a share sale?

In an asset sale, the buyer buys the business out of your company. Customers, contracts, domains, systems and goodwill move across to the buyer's entity.

Your company stays with you. So does its history.

In a share sale, the buyer buys the shares in your company. The same company keeps trading with a new owner.

That means everything inside it comes too. The bank accounts, the Stripe account, the team, the tax returns. And anything that went wrong five years ago.

Tax rules as at October 2026. Get your own tax advice.

What are buyers worried about in a share sale?

Unknown liabilities. When a buyer buys your shares, they buy your past.

These are the things I look for first, because they're common in founder-run agencies:

• Contractors who are really employees. Overseas team members engaged as contractors can still be treated as employees under the Fair Work Act. That can mean back pay, leave and super.

• Super and payroll tax. If either has been underpaid, the bill stays with the company.

• Missing company records. No register of members, no statutory books, no copy of the constitution.

• Assets in your name. The business name, domains or software accounts registered to you personally, not the company.

• Tax history. Every return the company has lodged comes with it.

None of these kill a deal. But in a share sale, they become the buyer's problem the day after settlement.

So a buyer will price that risk, protect against it in the contract, or ask for an asset sale instead.

Why do founders usually prefer a share sale?

Tax and a cleaner exit.

At the time of writing, if you sell shares you've held for more than 12 months as an individual or a trust, you can usually claim the 50% CGT discount.

Companies can't. In an asset sale, it's your company making the gain, without that discount. And you still have to get the money out of the company afterwards, usually as a dividend.

That's changing. From 1 July 2027, the 50% discount is being replaced with indexation and a 30% minimum tax on capital gains. Gains built up before then keep the discount.

The small business CGT concessions look to be staying. You generally need net assets under $6 million or turnover under $2 million. When you sell shares, at least 80% of the company's assets also need to be active assets, and goodwill counts.

If you qualify, they can be big:

• The 15-year exemption, if you've owned the business for 15 years and you're 55 or over and retiring.

• The 50% active asset reduction.

• The retirement exemption, up to $500,000 over your lifetime.

• A rollover that defers the gain.

Here's why that matters. A share sale at a lower price can leave you with more after tax than an asset sale at a higher one. And with the rules changing in 2027, when you sell may matter as much as how.

Compare offers after tax, not before.

It's also why a buyer may ask for some of that saving back in the price.

These rules are moving, so get your own tax advice before you compare offers.

Is it different in the US?

Yes. US buyers push hard for asset sales.

Buying assets lets them "step up" the assets to the price paid, then write them off over time, including goodwill over 15 years. A stock sale doesn't give them that.

Founders usually prefer a stock sale, because the gain is generally taxed once, at capital gains rates. If your business is a C corporation, an asset sale can mean tax inside the company and again when the money comes out to you.

So expect US buyers to open with an asset sale, and to price a stock sale lower. Get advice from a US tax adviser.

How is the price split in an asset sale?

In an asset sale, the contract has to say how the price is split across what you're selling. Accountants call it the purchase price allocation.

For a web agency, it usually looks like this:

• Goodwill. Most of the price. Your brand, your customer relationships and your recurring revenue.

• Plant and equipment. Laptops, servers, office gear. Usually a small number.

• Other intangibles. Software you own, domains, trademarks.

• Work in progress and prepaid revenue. Handled through the settlement adjustments.

Here's the part most founders get backwards.

In Australia, the buyer can depreciate the tangible assets, like equipment and bought software. It generally can't claim a tax deduction for goodwill. Customer contracts usually aren't depreciable either.

That's the opposite of the US, where a buyer can write goodwill off over 15 years. So in Australia, an asset sale doesn't give the buyer the same tax win.

The buyer's books are a different story. Accounting standards can treat customer relationships as a separate asset and write them down over their useful life. That's accounting, not tax. Don't mix them up.

Here's why the split matters to you:

• Goodwill is usually your friend. A gain on goodwill is a capital gain, so the CGT discount and small business concessions can apply.

• Equipment usually isn't. Sell it for more than its written-down tax value and the difference is generally taxed as ordinary income, with no discount.

• Stamp duty. Some states charge duty on goodwill and other business assets, so the split can change the buyer's bill too.

So the buyer wants more on equipment, and you want more on goodwill. Agree the split in the contract, so you both lodge the same numbers.

In an asset sale, how the price is split can matter as much as the price.

Australian tax rules as at October 2026. Get your own tax and legal advice.

Why does recurring revenue change the answer?

What a buyer pays for in a web agency is the recurring revenue. Care Plans, hosting, Growth Plans.

In an asset sale, that's the hardest thing to move because it's tangled up in a few areas:

• Billing. Subscriptions sit in your Stripe or billing platform, with card details tied to your account. Moving them can mean customers re-entering payment details.

• Customer agreements. They need to be assigned to the buyer, or customers need to accept new terms.

• Invoicing and banking. A new entity, a new ABN on the invoice, new bank details.

• The team. Employment ends with your company and starts with the buyer's, and entitlements have to be settled.

• Accounts. Domains, hosting, Google, Meta and every software licence.

Asking a customer to re-enter their card is asking them to reconsider.

That's how you end up voiding invoices. If I did that deal again, I'd move the payment tokens and test a few charges under the new entity before the first billing run.

The timing of the close matters too. I wrote about why we set one around the payment run in Why Recurring Revenue Changes Your Valuation. And prepaid revenue, prepaid expenses and work in progress all get split at settlement, which I covered in Working Capital Adjustments: The Second Negotiation.

What is a financial assistance whitewash?

It's the step that slows down share sales funded with bank debt.

If a buyer borrows to buy your shares, the lender usually wants the company being bought to back the loan. That means a guarantee, or security over the company's assets.

Under section 260A of the Corporations Act, a company helping someone buy its own shares is "financial assistance". It's allowed, but only after a whitewash under section 260B.

In plain English:

1. The company's shareholders approve it by special resolution.

2. ASIC is notified.

3. The company can't give the assistance until 14 days after that notice is lodged.

4. If the company will sit under an Australian holding company after the sale, the holding company's shareholders have to approve it too.

The holding company step is the one that catches people out, especially when the lender only asks for it late.

If the buyer is using bank debt, a share sale adds weeks, not days.

In an asset sale, none of this applies. The buyer's own company buys the assets and gives the bank security over them.

You won't do the whitewash paperwork as the seller. But you carry the delay, and every extra week before settlement is risk. I wrote about why momentum matters in How Long Does It Take to Sell an Agency?

What will a buyer ask for in a share sale?

Protection for everything that happened in the past, usually through:

• Warranties. Written promises about the company, its tax, its team and its contracts.

• Specific indemnities. You cover employee entitlements, super and payroll tax for the period before settlement.

• A tax indemnity. Usually with a longer claim window than general warranties. Years, not months.

• Conditions before closing. Gaps fixed before settlement, like missing records or assets in your name.

• Set-off. Anything you owe under the contract can come off money the buyer still owes you, like an earn-out.

Trade these against the overall price. If a share sale saves you tax and saves the buyer a billing migration, there's room for both sides to win.

What should you do before you talk to a buyer?

1. Model both tax structures. Asset sale and share sale side by side, after tax, including how the price is split, the small business concessions and the 1 July 2027 change.

2. Clean up the company. Records, business names and domains in the company's name, not yours. Get your contractor arrangements reviewed.

3. Map your billing. List every platform, every subscription and whose account the cards sit on. The more of your revenue sits on automatic billing, the more a share sale is worth to both sides.

4. Know how the buyer is funding it. If it's bank debt and a share sale, get the whitewash on the timeline from day one.

5. Decide what you're keeping, and what the protections are worth. In a share sale, anything staying with you has to come out of the company before settlement. Warranties, indemnities and money held back are normal, so know your number before you negotiate them.