Share Deal

Introduction

In the business world, there are several types of transactions that can be used to buy or sell businesses or parts of businesses. One of these transaction forms is the share deal. In contrast to the asset deal, in which assets of a company are acquired, the share deal refers to the purchase of shares in a company. This comprehensive guide provides detailed insight into the concept of the share deal, its advantages and disadvantages, legal aspects and much more.

Definition of the share deal

A share deal is a form of transaction in which a buyer acquires shares in a company. This means that the buyer takes over not only the assets of the company, but also its liabilities. The share deal is a common form of corporate takeover, especially for corporations such as the GmbH or the AG.

Advantages of the share deal

1. simplicity and efficiency

Compared to the asset deal, the share deal is often simpler and more efficient, as the entire company is acquired as a whole without having to transfer individual assets.

2. obtaining contracts and licenses

As a result of the acquisition of the shares, the company will continue to exist as a legal entity, which means that existing contracts, licenses and permits will be retained.

3. tax advantages

In some cases, tax advantages can be achieved through the share deal, for example through the use of loss carryforwards of the acquired company.

Disadvantages of the share deal

1. assumption of liabilities

Since the buyer acquires the entire company, he also assumes all liabilities, including possible hidden or unknown liabilities.

2. complexity of the due diligence

Due diligence can be more complex in a share deal because the entire company must be examined, not just individual assets.

3. possible shareholder disputes

If not all shares are acquired, conflicts with remaining shareholders or partners may arise.

Legal aspects

1. purchase contract

The share deal requires a purchase agreement in which the shares to be acquired are precisely listed. In addition, provisions must be made regarding the purchase price, payment terms, warranty, liability and other aspects.

2. due diligence

Prior to a share deal, a careful examination (due diligence) of the company to be acquired should take place in order to identify risks.

3. consents and approvals

In some cases, third party consents or regulatory approvals are required for the transfer of shares. It is important to clarify this in advance and ensure that all necessary permits are obtained.

4. minority rights

If not all shares are acquired, the rights of minority shareholders must be observed. In some jurisdictions, there are special protection provisions for minority shareholders.

5. compliance

The share deal must comply with the applicable statutory provisions, in particular company law, competition law and, where applicable, antitrust law.

Case study

An investor wants to acquire a technology company and decides to do a share deal. After careful due diligence and negotiations, a purchase agreement is concluded in which the investor acquires 80% of the shares in the company. The purchase price is determined on the basis of the financial performance of the company and its assets. The investor takes over the company with all assets and liabilities and plans to further expand the company.

Conclusion

The share deal is a common method for corporate acquisitions in which shares in a company are purchased. It offers advantages in terms of simplicity and efficiency, but can also present challenges in terms of debt assumption and due diligence complexity. It is important to plan carefully and consider legal aspects when doing a share deal. The involvement of a lawyer and, if necessary, a tax advisor is recommended to ensure that the transaction complies with applicable laws and regulations and that the interests of the purchaser are safeguarded.