Asset deal

In an asset deal, each asset is transferred individually. In the purchase agreement, the parties list exactly which items, contracts and rights pass to the buyer. Contracts with customers, suppliers or landlords transfer only with the consent of the respective counterparty. Liabilities generally remain with the seller unless they are expressly assumed.

For owners of mid-sized companies, the asset deal is often the buyer's choice, not the seller's. The buyer picks the good parts and leaves legacy risks behind. In addition, the sale proceeds flow into the company, not directly to the owner. In a German GmbH, the gain is fully taxable at company level, and tax is charged again when it is distributed to the shareholder.

Under German law, employment relationships transfer automatically to the acquirer under § 613a BGB, and dismissals because of the transfer are invalid. If the business name is continued, liability may arise under § 25 HGB, and for operating taxes under § 75 AO. No VAT is due on the transfer of a business as a going concern (§ 1(1a) UStG). The buyer can allocate the purchase price to the individual assets and depreciate it, which makes the deal attractive to the buyer from a tax perspective.

Example

Hypothetical example: A metalworking GmbH sells its business for €4.2 million. Of this, €1.5 million is allocated to the building, €1.1 million to machinery, €0.4 million to inventory and €1.2 million to goodwill. The buyer amortises the goodwill over 15 years, i.e. €80,000 per year.

Asset deal vs. share deal