How the deal is done.
WHAT THE TWO PRINCIPAL STRUCTURES ARE
Buying the shares of the company Buying the assets and business
WHAT BUYING SHARES MEANS
Acquiring the company as it is, with everything it owns and owes.
WHAT THAT INCLUDES
All liabilities, known and unknown History, including any past non-compliance Contracts, which usually continue
WHY THAT IS THE RISK
Unknown liabilities come with the company.
WHAT BUYING ASSETS MEANS
Acquiring defined assets and the business, leaving the company behind.
WHAT THAT PROVIDES
Selection of what you take Exclusion of unknown liabilities, generally
WHAT IT COMPLICATES
Contracts may require consent to transfer Licences may need reapplication Employment obligations may still transfer
WHY BUYERS USUALLY PREFER ASSETS
Less inherited risk.
WHY SELLERS USUALLY PREFER SHARES
A clean exit, and frequently better tax treatment.
WHAT DETERMINES THE OUTCOME
Negotiation, tax advice and the specific business.
WHAT TO OBTAIN
Advice on both, before negotiating.
WHY BEFORE
Structure affects price, tax and risk, and it is difficult to change later.
WHAT TO ESTABLISH
What is included and excluded, precisely.
WHAT IS COMMONLY EXCLUDED
Cash Debtors Personal items Specific liabilities
WHAT TO ADDRESS
Working capital: what level transfers with the business.
WHY
A business handed over without stock or debtors requires immediate funding.
