Times of crisis are often also times for company acquisitions. The takeover of a struggling company can be more advantageous for the buyer through an asset deal than a share deal.
First the COVID-19 crisis, now the Ukraine war and rising energy prices – the recent crises have driven many companies into economic straits. The willingness to sell the business or even the family business increases in such times. Times of crisis are therefore often also times for company transactions. M&A (Mergers & Acquisitions) is one of the core areas of the law firm MTR Rechtsanwälte, which provides buyers and sellers with experienced lawyers in the field of M&A.
If companies have fallen into economic difficulties due to crises or other problems, it is often the time for buyers who hope for a company takeover at favorable conditions. Purchasers should consider whether an asset deal might be more advantageous than a share deal, especially with struggling companies.
In a share deal, the buyer takes over the company with all rights and obligations. This also includes existing contracts, receivables, and liabilities. The company shares or business shares or stocks are acquired. To bring the company back to a financially healthy footing, the buyer may incur additional costs or investments. A share deal is therefore generally suitable for companies that are on a solid economic foundation.
The asset deal can prove to be the better option for economically struggling companies. In an asset deal, the company’s economic goods such as land, real estate, plants, machinery, rights, etc., are individually acquired. This involves considerable additional effort, which can pay off for the buyer. This is because they decide which parts of the acquisition they take over, thereby 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.
