Stückmann Podcast Episode 29: Share Deal vs. Asset Deal – Structuring Decisions in Corporate Transactions
Corporate transactions raise a key question at an early stage: should the sale or acquisition take the form of a share deal or an asset deal? In this podcast episode, Juliette Gill and Brigitte Hidding discuss the key differences between the two types of transaction. They highlight the tax, legal and financial considerations that buyers and sellers should bear in mind when choosing a structure, and explain why this decision plays a crucial role right from the start of contract negotiations.
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Topics from the podcast:
Share deal or asset deal
When it comes to corporate transactions, one of the first questions that arises at the very start of the M&A process is whether the sale or purchase of the company should take the form of a share deal or an asset deal.
This structural decision can be of crucial importance for both the buyer and the seller.
In today’s episode, we highlight the respective advantages and, where applicable, disadvantages that a share deal or an asset deal may entail.
Tax considerations
For shareholders of a corporation, a share deal is attractive as it generally allows them to take advantage of tax benefits. In contrast, an asset deal is usually more advantageous for the seller in such cases, as it creates opportunities for depreciation.
In addition, we will discuss the tax implications when a partnership is the subject of the transaction, address the treatment of loss carry-forwards, and briefly examine aspects relating to turnover tax and land transfer tax.
Legal aspects
Similarly, choosing between a share deal and an asset deal can have significant legal implications. Whilst in a share deal, in case of doubt, everything – including the risks – is transferred, an asset deal allows for a more selective approach. However, this also makes the asset deal considerably more complex.
Early planning is crucial
It is therefore not possible to make a blanket decision between a share deal and an asset deal. Tax implications, legal risks, commercial objectives and the respective negotiating positions of the buyer and seller all play a decisive role. For this reason, it is important to analyse the structure of a transaction at an early stage and to run through possible scenarios. Ideally, this assessment should take place before any letters of intent or contract negotiations. Only in this way can tax planning opportunities be optimally utilised and unexpected risks avoided.
