Share Sale vs Asset Sale in Singapore: Which Structure Protects Value, People and Contracts?

Who this is for

This guide is for Singapore business owners who are planning a sale and deciding between a share sale and an asset sale. This guide explains how each structure affects valuation certainty, employees, contracts and licences, speed, and risk.

For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to ‪+65 8079 0028. 

Share Sale vs Asset Sale

In a share sale, the buyer purchases shares in the target company that owns the business. The company itself stays the same. It remains as the same legal entity, holds the same registrations, remain bound by the same contracts (subject to any change-of-control clauses), and employees remain employed by the company.

In an asset sale, the buyer purchases selected assets and liabilities (e.g., equipment, intellectual property (IP), contracts etc.,). Assets must be listed and transferred one-by-one, and some contracts and licences may require counterparty or regulator consent or fresh applications. The seller’s company remains with assets and liabilities which are left behind.

High-level trade-offs between the two structures

• A share sale is usually more streamlined legally as it typically involves fewer individual transfers. It is usually cleaner for a full owner exit, but may still trigger change-of-control consents in some key contracts.
• An asset sale offers buyers the ability to cherry-pick assets and liabilities but this structure is more complex to paper and implement. Material contracts often need assignment and novation consents, and licences may not be transferable.

What actually changes in a share sale

 1) The legal entity remains unchanged

The company you sell continues as the same legal person (same name and business registration), and will be owned by the buyer after completion. That continuity is why share sales tend to minimise operational disruption, as most day-to-day processes can continue as before.

2) People

Because the employer, being the target company, is the same, employees do not automatically lose their jobs merely because the company’s shares were sold. Any bespoke retention or restructuring is a separate, later decision by the new owner.

 3) Contracts and licences

Many contracts continue automatically, but some may contain change-of-control clauses that require notice or consent (e.g., major customer agreements, key supplier or landlord leases, bank facilities). Robust legal due diligence is conducted prior to signing to surface and plan for these.

4) Speed and effort

Transferring shares typically requires fewer individual instruments than transferring every asset one-by-one, so the path to completing the transaction can be simpler. Do note, however, that this perspective remains subject to diligence, consents and negotiations.

 5) When this structure shines

• You want a clean exit and do not wish to continue operating a company with ongoing obligations in the long run.
• The company has many assets and contracts and would benefit from continuity.
• The company has a sound regulatory track record, with the buyer comfortable with inheriting legacy.

What actually changes in an asset sale

1) You pick what moves

The parties define a schedule of assets and liabilities to transfer (e.g., equipment, inventory, IP, customer contracts, leases). The higher the number of assets, the more drafting and closing work is required.

2) People

Because the employer changes in a true business transfer, employee movement may require contractual steps and, where applicable, statutory obligations to be adhered to. Practically, buyers and sellers plan employee offers, continuity and messaging early to avoid disruption.

3) Contracts and licences

• Contracts: Assignment or novation often requires counterparty consent; many material contracts restrict assignment or novation outright.
• Licences/permits: Some licences cannot be transferred and require fresh applications to the relevant authority under the buyer’s entity. Plan lead times and critical-path approvals.

4) Shareholder approval for “whole or substantially the whole” disposals

If directors propose to dispose of the whole or substantially the whole of the company’s undertaking or property, company approval is required under the Companies Act of Singapore (Companies Act). This is a key board/governance checkpoint when structuring an asset deal at scale.

 5) When this structure shines

• The company has legacy risks the buyer does not want to inherit.
• The buyer wants only specific assets (and limited liabilities).
• The business is not contract-dense (fewer counterparties to consent).

Which protects value best?

“Value protection” is not just the headline price. It is also the certainty of getting paid and the certainty of closing on time.

Share sale value drivers

• Continuity: Less operational friction can keep revenue and customer confidence intact during the process.
• Contract integrity: If change-of-control exposure is low or manageable, share sales preserve commercial momentum.
• Process simplicity: Fewer individual transfers means less room for execution slippage.

 Asset sale value drivers

• Risk ring-fencing: Buyers avoid unwanted liabilities, which can unlock a higher bid than they would offer for the whole company.
• Focused perimeter: If only certain product lines or assets are attractive, sellers can monetise those now and retain or wind down the rest.

Owner lens: If you operate an asset-heavy, contract-dense business with solid compliance, share sale often protects value by reducing moving parts. If there are legacy issues or undesirable liabilities, an asset sale might protect value by de-risking the buyer’s acquisition, and thus maintaining transaction price.

Which protects employees best?

Share sale: The employer does not change, so employees stay with the same company, payroll and benefits plans. In this structure, there is generally less anxiety and lower employee flight risk, subject to any post-closing restructuring by the buyer.

Asset sale: Because employment typically needs to move to the buyer’s entity, offer letters, acceptances, and transitions will have to be planned. With good communication, this process can be smooth, but it entails more planning and work, and is inherently disruptive.

If your non-negotiable is protecting jobs and continuity, the share sale structure naturally aligns with that goal.

Which protects contracts best?

Share sale: Contracts usually continue, unless a change-of-control clause is triggered. Those contracts which may have change-of-control clauses include banking facilities, key customer or supplier contracts, and major leases. Such issues are typically solvable with early identification and targeted consents.

Asset sale: Material contracts often prohibit assignment or novation without counterparty consent. In contract-dense businesses, the volume of third-party consents can become the determining factor in relation to transaction timelines.

Execution reality: If your revenue depends on a handful of material contracts, a share sale may involve fewer third-party negotiations. If key contracts are non-assignable or if a buyer intends to prune legacy arrangements, an asset sale lets them select what moves.

The incorporation question (for owners trading as sole proprietors)

If you run the business as a sole proprietorship, the business is not a separate legal entity and you carry unlimited personal liability. That makes a share sale impossible (as there are no “shares” to sell) and is often unattractive to buyers.

What to do instead (pre-sale):

• Incorporate a private company limited by shares (a separate legal entity with limited liability, and generally up to 50 shareholders). Then transfer the business assets/contracts/licences into the company, and open a new bank account in the company’s name.
• Where licences cannot be transferred, reapply under the new company’s name.
• When the transition is complete, notify ACRA that the sole proprietorship has ceased business.

This pre-sale incorporation makes a future share sale feasible and often easier to market to buyers who prefer acquiring companies over disparate assets.

A decision framework you can use

• If you want a clean exit and minimal disturbance: Strongly consider a share sale, provided due diligence does not uncover problematic change-of-control exposures.
• If the buyer is anxious about legacy risk: Use an asset sale to limit assumed liabilities and isolate the prized assets/customers. Expect more paperwork and more third-party consents.
• If your business is a sole proprietorship and you are considering a share sale: Incorporate first, then pursue a share sale. This step also supports succession planning and limits personal liability.
• If you plan to dispose of nearly everything via asset sale: Check governance early. Company approval may be required for whole or substantially-whole disposals under the Companies Act.

Execution pitfalls and how to avoid them

1. Look out for change-of-control clauses

Don’t assume contracts continue to remain untouched in a share sale. Read the contracts carefully. Some require notice, some consent, some allow termination on change of control. Identify early.

2. Non-assignable contracts in an asset sale

Material agreements may not be assigned or novated. In such cases, plan counterparty engagement and consider alternative solutions if consent cannot be obtained.

3. Licences and permits

Treat licence transferability as a yes/no grid; where transfer is disallowed, plan fresh applications and reflect the lead time in the long-stop date and conditions precedent.

4. Governance blind-spots

If your asset deal is effectively a whole-undertaking disposal, diarise the shareholders’ approval step to avoid schedule slips.

5. Sole-prop to company timing

Rushing incorporation after buyers appear creates friction. Incorporate early, move assets/contracts, then market a share sale.

Owner’s quick checklist

• I can articulate why share sale or asset sale better protects value, people, and contracts in my case.
• I know which contracts have change-of-control or no-assignment language.
• I have mapped licences/permits that cannot be transferred and have planned re-applications.
• If disposing of nearly all of the property of the company via asset sale, I have scheduled company approval per Companies Act requirements.
• If I’m a sole proprietor, I have incorporated and shifted assets/contracts before marketing to buyers.

Consult us

If you are not sure which route fits, send us a snapshot of your people, contracts, and licence map. We will give you a structure-first legal view to determine whether a share sale or asset sale suits your circumstances better, and outline the exact consents you will need to close cleanly.

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FAQ – Share Sale vs Asset Sale

 Which structure is “faster”: share sale or asset sale?

A share sale is often faster because you transfer shares rather than every asset one-by-one. That said, if many key contracts have change-of-control, notification and / or consent clauses, you must budget time for notices/consents.

Will my employees be terminated in a share sale?

No. The company remains the same employer in a share sale. Any changes to roles/compensation would be a separate business decision.

In an asset sale, do my contracts move automatically?

Usually not. Many material contracts restrict assignment or novation; the buyer typically needs counterparty consent and new documents.

We plan to sell “almost everything” via an asset sale. Any special approvals?

Yes. If the disposal amounts to the whole or substantially the whole of your undertaking or property, company approval is required under the Companies Act. Plan this early.

I’m a sole proprietor, can I do a share sale?

No. A sole proprietorship is not a separate legal entity and has no shares to sell. Incorporate a private company, transfer assets/contracts/licences to it, then you can market a share sale.

How many shareholders can a Singapore private company have?

Generally up to 50 shareholders, which is the statutory ceiling for a private company limited by shares.

Which structure better protects key customer contracts?

If those contracts prohibit assignment, a share sale can be cleaner, subject to any change-of-control consents. Map the exact clauses before you decide.

Which structure do buyers prefer?

It depends. Buyers concerned about legacy liabilities may prefer an asset sale to select what they take. Buyers seeking continuity, for example, in relation to people, systems, contracts, often favour share sales.

For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to ‪+65 8079 0028.

Disclaimer: Our articles are intended for your general information only. They are not intended to be nor should they be regarded as or relied upon as legal advice. These articles neither constitute nor substitute independent legal advice, and you should still seek independent legal advice for your legal matters. You should consult qualified legal professionals before taking any action or omitting to take action in relation to the matters discussed in our articles.