Share Deal

In a share deal, the buyer acquires shares in a company. Assets, contracts and liabilities remain with the company while its ownership structure changes. Unlike an asset deal, the individual assets of the business are not transferred separately to the buyer. A share deal can involve all shares, a majority stake or a minority interest.

The practical advantage is continuity. The company remains the contracting party for customers, suppliers, landlords and employees, so contracts generally do not need to be transferred individually. Change of control clauses still require review, as do permits and financing arrangements where a new owner may require consent, notification or reassessment. Key customer agreements and credit facilities should therefore be examined early in the process.

The trade-off is that existing risks remain within the company as well. These may include additional tax assessments, environmental liabilities, warranty claims or litigation. The buyer shares their economic consequences through its investment. Due diligence aims to identify those risks so they can be reflected in valuation, the warranty package or specific indemnities.

Tax attractiveness depends on the legal form and the parties involved. Acquiring shares in a corporation generally does not increase the tax bases of its individual assets. An asset deal, by contrast, may provide the buyer with additional depreciation or amortisation. Selling shares may be more favourable for the seller. This difference often influences structure negotiations and pricing, but it does not justify a universal conclusion for every share acquisition.

Execution requires particular attention to the precise stake acquired, the rights of other shareholders and the conditions for transferring ownership. German GmbH share purchases require notarisation. Economically, it remains essential to establish whether the acquired company holds all the assets and rights needed to operate, or still depends on services and assets provided by the seller.

Note: This explanation is for general information only and does not constitute tax or legal advice. The tax and legal position depends on the individual case and may change with new legislation or case law. For a binding assessment, please consult a qualified tax adviser or lawyer.