Most small salons are sold as a business, known as an asset sale, even when they are run through a limited company. Share sales are simpler for some things and more complicated for others, and the right choice usually comes down to the lease and tax.
In an asset sale, the buyer buys the salon itself: the goodwill, the equipment, the stock and the lease. Your company receives the money and keeps any debts and history. In a share sale, the buyer buys your company, including everything it owns and everything it owes.
How they compare
- The lease: in an asset sale it is assigned with the landlord’s consent. In a share sale it stays with the company, although some leases still need consent for a change of control.
- The staff: in an asset sale they transfer under TUPE. In a share sale nothing changes because the employer is the same company.
- Liabilities: in a share sale the buyer inherits the company’s past, so they will want warranties, indemnities and much more paperwork.
- Tax: a share sale can be cleaner for the seller, because the money comes to you directly rather than into a company you then have to extract it from.
Which is usual for salons
Buyers of smaller salons generally prefer an asset sale because it is quicker and they do not inherit any history. Larger groups sometimes prefer to buy shares. Talk to your accountant about the tax difference before you decide.