Why the Smarter Deal Structure can Sometimes Make a Sale Feel Harder
Why the Smarter Deal Structure can Sometimes Make a Sale Feel Harder
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 and it just quietly became harder than it ever needed to be.
Turnover was under $2 million. Solid margins, steady history, no wild complexity. In any other universe, it would have been a clean asset sale: buyer takes the business, seller keeps the company shell and cleans up the rest with their accountant.
But the seller arrived at our first call with one firm instruction:
“My accountant says it has to be a share sale and 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 including 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 corporate 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, that includes 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.
Behind the scenes, you could feel the trust starting to fray.
The buyer’s camp was thinking: “If this is how hard it is to get basic information, what else is hiding in here?”
The seller was thinking: “No-one told me it would be like this and 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, 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 isn’t “never do a share sale under $1 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 and they’re choosing a level of due diligence intensity and a personal risk profile.
When that’s clear upfront, a demanding DD 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.
If you'd like more info on anything Joanna has discussed in this article, get in touch with Joanna via LinkedIn, Email joanna.oakey@aspectlegal.com.au or visit AspectLegal.com.au
Tags: business owner small business tips
About the author
Joanna Oakey
Lawyer and Managing Partner, Aspect Legal
Joanna Oakey is a commercial lawyer and deal maker with a passion for business, who has worked with hundreds of businesses during her 2 decades in the ...
