Times of crisis are also often times for company acquisitions. The acquisition of a struggling company can be more advantageous for the buyer through an Asset Deal than a Share Deal.
First the Corona crisis, now the Ukraine war and rising energy prices – the recent crises have economically squeezed many companies. The willingness to sell the business or even the family business increases in such times. Therefore, times of crisis are often also times for company transactions. M&A (Mergers & Acquisitions) are among the specialties of the law firm MTR Rechtsanwälte, which provides buyers and sellers with experienced attorneys in the field of M&A.
If companies get into economic difficulties due to crises or other problems, it is often the moment for buyers hoping for a company acquisition at favorable conditions. Buyers should consider whether an Asset Deal would be more advantageous than a Share Deal, especially for financially troubled companies.
In a Share Deal, the buyer takes over the company with all its rights and obligations. This includes existing contracts, claims, and liabilities. The company shares or stocks are acquired. To put the company back on a sound economic footing, further costs or investments may accrue to the buyer. A Share Deal is generally favorable for companies with a solid economic foundation.
The Asset Deal can prove to be a better option for economically struggling companies. In an Asset Deal, the economic goods of the company, such as land, real estate, equipment, machinery, rights, etc., are individually acquired. Although this involves considerable additional effort, it can be worthwhile for the buyer. They decide which parts of the company they take over, significantly reducing their risk. Only the empty shell of the company remains. However, if the company is to be continued, the buyer may also be liable for the previous owner’s liabilities and the company’s tax debts.
To assess the risk of a company transaction, a comprehensive Due Diligence review is essential.
Experienced lawyers at MTR Rechtsanwälte advise clients on M&A transactions.
