Share Deal or Asset Deal
Evaluation
- Buying and Selling of
Businesses
It is important to clarify
the legal construction for the sale in the
early stage of the sales process.
In recent years, the
recommendation of legal and tax advisers to
establish a holding company (A/S or ApS)
where the shares of the operating company
are held, have to a great extent been
followed by the industry.
If the "holding" structure
has been established more than 3 years prior
to selling the shares of the operating
company, most owners will want to sell the
shares rather than the assets.
The consequences of a "Share
deal" are among other things:
-
Unchanged company number
(CBR No.).
-
The company continues as
before the sale.
-
Buyer takes over all
"risks" (despite financial compensation
in the legal contract).
-
Sellers' share profit is
tax-free (deferred tax) in the holding
company after 3 years ownership.
-
Buyer cannot depreciate
the purchase price for the shares.
An "Asset deal" implies for
instance:
-
Start up operations in a
new company (CBR No.).
-
New contracts have to be
made with customers, suppliers and
staff.
-
Buyer is not taking over
the risk on previous deliveries
(important in for instance the
construction industry).
-
Seller is taxed on the
profit on sold assets (sales price less
tax depreciated value).
-
Buyer can depreciate on
the purchase price for part of the
assets (machines, equipment, good will
etc.).
The auditors of the sellers
should be involved in the above
considerations, leading to a conclusion as
to how the sale of the company should be
realized.
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