This is the conversation that should happen before the accountant’s email suggests a share sale.
By Joanna Oakey, Managing Partner of Aspect Legal & Host of The Deal Room Podcast
A few months ago I had a seller come to me with what, on the face of it, should have been a straightforward business sale.The deal didn’t blow up — it just quietly became harder than it ever needed to be.
But the seller arrived at our first call with one firm instruction:
“My accountant says it has to be a share sale – it’s the best way for me to save tax.”
On paper, the reasoning wasn’t crazy. There was a potential tax advantage in exiting via a share sale rather than selling the business assets. The problem wasn’t the tax advice itself, it was what had been left out of the discussion.
No-one had sat the seller down and said, in plain language:
- A share sale means the buyer is effectively buying everything – history, skeletons and all.
- That means deeper, heavier due diligence, and
- Much broader warranties sitting on you personally, often for years after completion.
So we rolled on.
The buyer was a sophisticated corporation with experienced advisers. The multiple on the table was attractive – higher than what we’d expect from a smaller trade buyer. From the seller’s perspective, the numbers looked great. The share vs asset distinction felt like a technicality, and the tax saving felt like a win.
Then due diligence ramped up.
What the seller had imagined was “a couple of weeks of questions” turned into a highly structured, line-by-line review. Not just the business operations, but the whole company: historical contracts, past employees, old disputes, long-forgotten supplier arrangements – all of it back under the microscope.
About three weeks in, the tone of our calls changed.
“Why are they asking for this?”
“Do they really need that?”
“This is ridiculous – this was years ago.”
Nothing the buyer was asking for was out of line for a share sale of that type, with that price tag. But from the seller’s point of view, it felt like an ambush. They’d said “yes” to a structure for tax reasons, and were only now discovering the emotional and time cost that came with it.
Two Sides of the Story
Behind the scenes, you could clearly feel the trust disappearing.
The buyer’s side was thinking: “If this is how hard it is to get basic information, what else is hiding in here?”
The seller was thinking: “Nobody told me it would be like this – this isn’t what I signed up for.”
It wasn’t that anything catastrophic was uncovered. The real problem was expectation.
The conversation about trade-offs – “you can save tax here, but you’ll pay for it in time, scrutiny and warranties” – simply hadn’t happened early enough.
By the time we were trying to reset expectations, deal fatigue had set in – everyone was tired. It was exactly the sort of moment where people say, out loud or under their breath:
“This should have been picked up earlier.”
The Lesson
The lesson isn’t “never do a share sale under $2 million”. There are perfectly good reasons to structure a deal that way.
The lesson is: if you’re going to recommend a share sale for tax reasons, you need to have the second half of the conversation at the same time as the first. Sellers need to understand, right from the beginning, that they’re not just choosing a tax outcome – they’re choosing a level of due diligence intensity and a personal risk profile too.
When that’s clear upfront, a demanding Due Diligence process still isn’t fun. But it doesn’t come as a shock. And you’re far less likely to find yourself mid-way through 2026, in another transaction, watching a seller melt down under the weight of a process they technically agreed to – but no-one really explained.
JOANNA OAKEY
Managing Partner Award-Winning Commercial Law Firm, Aspect Legal
Podcast Host – The Deal Room Podcast & Talking Law
Best-selling Author – Buy, Grow, Exit: The Ultimate Guide to Using your Business as a Wealth Creation Vehicle
Award-winning commercial lawyer, and Managing Partner of Aspect Legal, Joanna Oakey has worked with thousands of businesses and business owners (and their advisors) as they acquire, grow and exit.
If you’d like more info on anything Joanna has discussed in this article, get in touch with Joanna via LinkedIn, Email ([email protected]) or visit : AspectLegal.com.au
