Why do sellers usually prefer a share sale?

A share sale is taxed once, to the owner, as a capital gain that the lifetime capital gains exemption may shelter. An asset sale is taxed in the company and again when the proceeds are paid out, and the exemption does not apply to the company’s gain.

Why do buyers usually prefer an asset sale?

The buyer depreciates the price allocated to equipment and goodwill against its own income, and leaves the company’s past liabilities behind. In a share sale the buyer inherits the company’s tax values and its history.

What is a capital dividend?

A dividend paid out of the capital dividend account, which holds the non-taxable half of the company’s capital gains. The company elects to pay it, and the shareholder receives it free of tax.

Can a sale combine the two?

Yes. In a hybrid sale, some assets are sold by the company and the shares are sold by the owner, so the owner uses the exemption and the buyer obtains part of the depreciation it wants. The split depends on the specific facts and needs tax advice.

InvestDeal

CALCULATORS

Asset sale vs share sale calculator

What the owner keeps after tax under each structure, at the same price.

THE SALE

Purchase priceCash-free and debt-free

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Selling costsAdvisory, legal and accounting fees

Province

Owner’s other taxable income in 2026

SHARE SALE

Adjusted cost base of the shares

Shares qualify for the lifetime capital gains exemption

Up to $1,275,000 in 2026, unused

ASSET SALE, PRICE ALLOCATION

Equipment and vehicles, price allocated

Equipment and vehicles, original cost

Undepreciated capital costFrom the company’s tax return

Inventory, price allocated

Inventory, cost

Goodwill, the balance of the price$3,000,000

Company’s other taxable income in the yearUses part of the $500,000 small business limit

To the owner after tax

Share sale

Asset sale

The share sale leaves $390,945 more. An asset sale would need a price of about $4,550,000 to match it.

SHARE SALE

Capital gain$3,879,900

Lifetime capital gains exemption−$1,275,000

Tax to the owner$891,275

To the owner after tax$2,988,725

ASSET SALE

Recapture and inventory income, taxed in the company$250,000

Capital gain in the company$2,880,000

Corporate tax, after the dividend refund$310,040

Capital dividend, tax-free$1,440,000

Taxable dividends$2,129,960

Personal tax on the dividends$972,181

To the owner after tax$2,597,779

The asset sale assumes the company pays out all of its proceeds as dividends in 2026. Real estate held in the company is outside both figures.

The structure decides how much of the price is kept. The price starts with a valuation.Get your free valuation

Method and assumptions

An estimate for planning. A sale is priced and taxed on its own facts, confirmed by the seller’s advisors.

GUIDES

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01Share sale: the capital gain to the owner, less the exemption where the shares qualify, taxed at 2026 personal rates with minimum tax.
02Asset sale: the company reports recapture of capital cost allowance and the gain on inventory as business income, taxed at the small business rate up to the $500,000 limit and at the general rate above it. Goodwill, and equipment sold above its cost, produce a capital gain, one half taxable.
03The non-taxable half of the capital gain is paid out as a tax-free capital dividend. The balance is paid as taxable dividends, eligible to the extent of income taxed at the general rate, and the dividends release the refundable tax the company paid on the capital gain.
04The calculation assumes one shareholder, a company that pays out all of its proceeds in 2026, no real estate in the company, goodwill built by the business itself, and no other balances or losses. The matching asset price keeps the same allocation and adds the difference to goodwill.
05Ontario’s small business rate is the 2026 calendar-year blend of 3.2 percent and 2.2 percent. Quebec’s assumes the company meets the 5,500 paid hours test.

Source: CRA, capital dividends; CRA, capital gains deduction

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Your financials

IndustryPrecision manufacturing

Revenue$7.2M

Adjusted earnings$1.45M

How buyers price it (three ways)

Revenue multiple0.6 – 0.9×

EBITDA multiple4.5 – 6.0×

Adjusted earnings multiple3.8 – 5.1×

$0.0M – $0.0M

$1.45M adjusted earnings at 3.8 – 5.1×, the multiple this profile earns

Two things would move it before you sell: your largest customer is 38% of revenue, and most of the business still runs through you

What comparable sales cleared at (28 in your sector and size)

Median 4.2×

You, 4.6×

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How InvestDeal compares with a traditional sale

TRADITIONAL PROCESS

InvestDeal

Buyer matches
TRADITIONAL
80% of businesses listed never sell
50+
Qualified buyer matches per business, on average
Time to interest
TRADITIONAL
9 to 12 months from listing to close
30 days
To initial buyer interest
Fees
TRADITIONAL
6%+ success fee, plus upfront fees or a retainer
Success fee only
$0 upfront, no retainer
Buyer reach
TRADITIONAL
Limited to one broker’s personal network
Platform-wide matching
Across active buyer demand
Valuation
TRADITIONAL
Asking price set by rule of thumb
AI valuation models
Trained for each industry, free for every owner

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WHAT YOU’LL GET

01. An initial value range

An estimate of what your business could sell for

02. Likely buyers

Which strategic and financial buyers may be interested

03. The sale process

Timing, next steps and what a sale involves

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Frequently asked questions

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