Types of acquisition

Introduction

Acquisition is divided into:

  • share deals (also share purchases)
  • asset deals (also asset purchases; purchase of a company with assets and liabilities).

Issues valid for each variant and the implementation of both transaction types will be presented in the sections on share deals and asset deals.

Share deals

  • Basic criteria:
    • only possible for capital companies
      • businesses the value of which is represented in shares
      • legal basis: purchase of shares or stakes
      • quantities: all or part of the shares
  • Shareholders:
    • share deal leads to a change in shareholders
  • Complexity:
    • due diligence necessary / disclosure risk and problem of ongoing operations (change in circumstances between signing and closing)
    • problems in valuing goodwill
  • Prevalence:
    • high
  • Alternative approaches:
    • asset deal
    • merger with investor company
      • capital company with the same legal status

Asset deals

  • Basic criteria:
    • Possible both for partnerships and capital companies
    • Agreement on the take-over of the assets and liabilities of a transferor legal entity
    • Legal basis:
      • sole tradership, partnership or capital company:
        • purchase
        • transfer of assets pursuant to Article 69 ff. of the Swiss Law on Mergers
        • sole trader business
          • registered in the commercial register: asset transfer pursuant to Article 69 ff. of the Swiss Law on Mergers
          • not registered in the commercial register: asset transfer pursuant to Article 181 of the Swiss Code of Obligations
  • Shareholders:
    • the shareholders of the transferor and of the transferee legal entity remain unchanged
  • Complexity:
    • inventory required
    • evaluation problems for complex items
    • etc.
  • Prevalence:
    • has become more infrequent
  • Alternative approaches:
    • Capital company:
      • share deal
    • Partnership
      • change of partner
    • sole trader business
      • no alternatives

Share deal or asset deal

The type of transaction chosen for acquisitions will depend on the following factors:

  • Partnerships
    • only asset deals
  • Capital companies
    • share deals and/or asset deals
      • divestment of the entire company: share deal
      • divestment of part of a company: asset deal
  • Tax implications
    • tax burden for vendors
    • deferred taxes for investors
    • tax burden for the company

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