Two ways to sell a business are:
a) Sale of Shares.
b) As a ‘Going Concern’

Sales of shares simply put is when you buy the shares of the company from the seller and acquire the legal entity as it is.

A ‘going concern’ is different in that you buy the business and its assets along with the business and brand name, its I.P., clients, Goodwill etc from it’s current legal entity and place it into a new or existing legal entity that you own.

Why do we always recommend going concern transactions?

There are a number of reasons however the main reason is to protect the buyer from any contingent liabilities in the business.

If buying the shares of a company, by default, you acquire the legal entity and responsibility for the company as well as all its historical transactions. It’s the historical transactions you want to avoid and no matter how thorough your due diligence is, it’s always possible to miss something.

As you now own the legal entity you also own any liability or problem with that entity.

Going Concern transactions allow you to avoid unknown risk. Liability remains with the original entity and does not transfer with the sale.