The share deal is particularly advisable when acquiring a company as a whole, rather than just acquiring individual assets as in the case of an asset deal.
Experts assume that M&A transactions will particularly pick up again in the second half of 2023. When purchasing a company, either a share deal or an asset deal may be considered. Therefore, before a company transaction, it should be considered which option is better in each case, according to the law firm MTR Legal Rechtsanwälte, which advises its national and international clients in the field of M&A.
While only individual assets and resources belonging to the company are purchased in an asset deal, in a share deal the entire company is acquired by purchasing the company’s shares. The company remains practically unaffected and is acquired with all assets, liabilities, and contractual relationships. This offers the advantage that the relations are clear and, unlike an asset deal, it is not necessary to determine individually which assets transfer to the buyer. A share deal, therefore, often proceeds more quietly.
However, the company is acquired with all existing liabilities and obligations. The existing risks should be carefully examined before a purchase so that there are no nasty surprises and liability risks after the purchase. However, not all existing risks are always recognized before the transaction. If a company is in serious financial difficulty, this can speak against a share deal and make the asset deal more advantageous.
For in an asset deal only individual assets are acquired. The buyer decides which parts he acquires and thus significantly reduces his risk. However, all assets to be purchased must be individually recorded and then transferred in compliance with the respective regulations. This means a significant additional effort. If an asset is ‘forgotten’ in the purchase agreement, it remains with the seller.
Attention should also be paid to the different tax implications that a share deal and an asset deal can involve.
Experienced lawyers at MTR Legal Rechtsanwälte advise clients on M&A transactions.
