Asset sale vs share sale: the consents you need before you can complete
Beyond tax and liability, the two exit routes need very different third-party approvals to close, and that difference can decide your completion date.
Why consents matter more than founders expect
Most founders comparing an asset sale and a share sale focus on tax treatment or who inherits the liabilities. Less obvious, but often more disruptive to a deal timetable, is the question of consent. Who else has to say yes before the deal can actually complete? The answer differs sharply between the two structures, and getting it wrong is one of the most common reasons a UK exit slips by weeks or months.
Share sales: consent lives at the company level
In a share sale, the target company itself does not change. The buyer simply acquires the shares, so contracts, leases, licences and employment relationships continue with the same legal entity as before. In principle this means fewer third parties need to be asked for permission, because the counterparty to each contract has not changed.
But this is not the same as needing no consents at all. Many commercial contracts, banking facilities, leases and grant agreements contain change of control clauses. These trigger a requirement to notify or obtain consent from the other party whenever the ownership of the company changes, even though the contracting entity stays the same. Founders are often surprised to find that their office lease, their main supplier agreement, or a government grant they hold contains a change of control clause buried in the boilerplate. Missing one of these can put the buyer in breach the moment the deal completes, or give the counterparty a right to terminate.
Regulated businesses face an extra layer. If the company holds FCA authorisation, an SRA licence, a CQC registration or similar, a change of control above a certain threshold usually needs prior regulatory approval before it can take effect, not just notification after the fact. This can add real time to a share sale timetable, because the regulator’s process runs on its own clock.
Asset sales: consent lives at the contract level
An asset sale works differently. The buyer is not acquiring the company; it is acquiring specific assets, contracts and sometimes employees out of it. Because the buyer is a new legal party to each of those contracts, many of them cannot simply carry over. They need to be formally assigned or novated, which almost always requires the consent of the other party to that contract.
This matters enormously in practice. A key customer contract, a software licence, an office lease or a supplier agreement typically cannot be transferred to the buyer without that counterparty agreeing to a novation, under which the original party is released and the new buyer steps into its place. If a customer or supplier refuses, or simply drags its feet, that contract may not transfer at all, leaving a gap in what the buyer actually receives.
The same logic applies to intellectual property licences and to any grant funding, which often cannot be assigned without the funder’s agreement. Employees moving across in an asset sale are usually protected separately, under TUPE, which has its own consultation requirements rather than a simple consent process, but it adds another parallel workstream with its own timetable.
Why this shapes negotiation, not just paperwork
Because an asset sale can require dozens of individual consents, sellers and buyers often start negotiating the deal itself before knowing whether every underlying contract will actually transfer. This creates real leverage issues. A key customer who realises their consent is needed may try to renegotiate their own terms as the price of agreeing to novation. A landlord may demand a rent review before consenting to an assignment of the lease. Buyers sometimes build conditions into the purchase agreement requiring a minimum number of material contracts to have transferred before completion, or price adjustments if some do not.
Share sales avoid most of this friction precisely because the contracting party never changes, which is one reason buyers of businesses with many customer or supplier relationships often prefer a share sale even when the tax position would otherwise favour an asset structure. Conversely, a buyer who only wants specific assets, or who wants to leave certain liabilities behind entirely, will still choose an asset sale despite the consent burden.
What founders should do early
Before a deal reaches heads of terms, it is worth pulling together every material contract, lease, licence and grant agreement and checking two things: whether it contains a change of control clause, and whether it would need to be assigned in an asset sale. Doing this early, rather than during due diligence under time pressure, gives founders a realistic view of which structure is actually achievable and how long consent-gathering might take. Solicitors experienced in UK M&A will normally build a consents schedule into the transaction process for exactly this reason, and it is worth asking for one from the outset rather than discovering the gaps midway through negotiations.
For general guidance on company law obligations around transfers and regulated change of control, founders can check the primary regulators and official guidance relevant to their sector before assuming a deal structure is straightforward.