Asset deal or share deal? A decision framework

The four factors

Transfer tax first. It applies routinely in an asset deal and only under certain conditions in a share deal. Thresholds and holding periods have been tightened repeatedly, so pure tax avoidance no longer carries the decision. What remains is whether the target company already exists and is cleanly run.

Liability second. Buying shares means buying history: contamination, tax exposure, pending proceedings, pension commitments. Warranties and indemnities soften this but never remove it.

Depreciation base third. The asset buyer depreciates on the purchase price; the share buyer inherits book values. For long-held assets this difference is material — and regularly underestimated in price talks.

Buyer universe fourth. Some institutions will not buy companies with history for compliance reasons; others specifically want shares. Committing early cuts off part of the market.

What it is worth

In processes we have run, the gap between the optimal structure and an arbitrary one regularly reached a mid six-figure sum, and more on larger volumes. It shows up directly in what bidders are willing to pay.

Practically: fix the structure with the tax adviser before going to market, model both variants, and state it in the teaser. Bids then arrive on a comparable basis.

The usual stumbling block

A property company that was never intended as a sale vehicle: incomplete accounts, unresolved shareholder loans, an open tax audit. All fixable — but not in four weeks. Plan six months of clean-up before a share deal.