One objective, two different routes
A buyer looking to acquire a company or a business line generally faces two basic choices: buy the shares or capital contribution in the target, or buy the target's assets. Commercially the two can lead to the same outcome — legally, and in terms of tax and risk, they differ considerably.
Buying shares: inheriting the whole company
Buying shares means taking the company with all of its assets, contracts and licences — and with its outstanding obligations and risks. The advantage is that the transfer is usually simpler and the legal entity and its existing licences stay intact. The drawback is inherited risk: past tax, labour or dispute issues follow the company to its new owner.
Buying assets: selective, but more complex
An asset purchase lets the buyer pick exactly what it needs and limit the obligations it inherits. In exchange, the process is usually more complex: each asset has to be transferred, some licences must be applied for again, and the tax arising on the transfer of the assets has to be dealt with.
There is no absolutely "right" choice
The right structure depends on the objective, the appetite for risk and the characteristics of the target. The warranty and indemnity provisions in the contract also need to be designed around the structure chosen. Talking to a lawyer early helps the buyer take the right route from the outset — contact TLA for advice.
