Whereas in a share deal, company shares are acquired, in an asset deal, the buyer acquires individual assets or economic goods of a company. With both variants, the complete acquisition of a company is possible. Which method is used or applied depends on the circumstances of the individual case. However, it can be said with certainty that the share deal is easier to realise, whereas the asset deal gives the acquirer more control. Both variants, therefore, have advantages and disadvantages.
Before you decide on one of the transaction options, you should consult an experienced lawyer. The lawyers at Schlun & Elseven will be happy to explain which method suits your interests and goals best.
Advantages and disadvantages
In a share deal, company shares are acquired. The buyer thereby indirectly receives the company in the form it currently exists. The asset and liabilities are also taken over through such a company purchase. In essence, this means that with the acquisition of company shares, any agreements concluded with third parties, as well as tax aspects and other contracts, are also taken over in the form in which they exist at the time of the acquisition. Accordingly, the takeover within the framework of a share deal does not affect the ongoing business relations.
A share deal offers the advantage that the acquired assets do not have to be defined in detail, as all assets and liabilities automatically take over with the purchase. The administrative expense is very low with this transaction option.
However, this aspect can also be a disadvantage. Before the purchase, it is often not recognisable if the company is structurally and organisationally well-positioned and successful when acquiring the shares. The acquisition of shares also exposes the buyer to liability risk. Due to these aspects, thorough due diligence and the advice of legal counsel are necessary, especially before concluding a share deal. In this way, you can avoid unpleasant surprises and ensure that you are indeed acting in your best interests.
Please note: The acquisition of shares in a limited liability company (GmbH) in Germany requires notarization under Section 128 of the German Civil Code (BGB).
In an asset deal, the buyer acquires individual assets, such as land, building, machinery or similar. If an acquire wishes to maintain the company in its unity within the framework of this purchase variant, the acquisition of all assets is necessary.
However, his procedure often proves to be lengthy. The more assets are acquired, the more likely the buyer and seller will lose track of them. Therefore, a precise list of these assets is usually drawn up. When transferring these, it is essential to note whether each required or intended asset was actually acquired and thus transferred. This is particularly the case when it comes to contractual relationships that are not automatically transferred to the buyer. For the transfer of contractual relationships/agreements with third parties, such as suppliers or landlords, the consent of these is required.
While the time aspect can be a disadvantage, the asset deal also has a clear advantage compared to the share deal: the buyer has more control over the acquisition. By listing in detail, the assets to be acquired and existing contractual relationships with third parties, it is still possible for the seller to maintain an overview. In addition, with this acquisition, you reduce the risk of making a purchase you regret later.
Also, note that intangible assets such as patents and trademarks can be acquired during a business purchase. Here, the market value of these should be determined. The valuation should be prepared in advance.
Asset deals are particularly attractive during insolvency, as the assets in question can be acquired more cheaply at this time. However, a transaction can also lead to complications with the insolvent company’s creditors. In such cases, the encounter between the insolvent company, the insolvency administrator, and the creditors requires a specific negotiation skill. Our experienced German lawyers advise you in such complex cases and conduct the negotiations with the various parties.
Due to the takeover of all rights and obligations in the context of a share deal, the acquirer of the shares in the company is also liable for all transactions of the predecessor. In principle, the buyer is responsible from the time of the takeover. However, liability for events that have already occurred is not entirely excluded. For example, the acquirer can be held liable for offences before purchasing.
In the asset deal, on the other hand, the buyer only assumes liability for the assets he acquires.