Asset Deal vs. Share Deal in M&A transactions: How to choose the optimal structure

Asset Deal vs. Share Deal: Two ways to structure a transaction

In an M&A transaction, one of the first decisions facing buyer and seller is not the price, but how to structure the deal. There are two main alternatives: acquiring the shares or equity interests of the company that owns the business —known as a share deal— or acquiring specific assets and, where applicable, the liabilities associated with them —known as an asset deal.

The choice between the two is not a merely formal matter. It has significant consequences on the financial, tax, legal, labor, contractual, and operational levels, and it shapes both the allocation of risk between the parties and the effective price the seller ultimately receives. For this reason, before initiating a sale, it is essential to analyze which structure maximizes the value of the transaction and minimizes the risks for each party. There is rarely a universal answer: what is optimal for the buyer may be tax-penalizing for the seller, and vice versa.

Share deal: acquiring the company as a whole

In a share deal, the buyer acquires the company that owns the business. Indirectly, it gains control of all its assets, contracts, commercial relationships, licenses, employees, and the other elements that make up the company. The business remains the same legal entity; only its ownership changes.

The main advantage of this structure is its operational simplicity: instead of transferring each asset individually, ownership of the shares or equity interests is transferred. It is therefore the usual approach when the buyer wants to acquire the entire business and preserve continuity of operations without substantially altering the existing legal structure. Contracts, licenses, and employment relationships remain, in principle, unchanged, because their holder —the company— does not change.

The flip side is that the buyer takes on the company with its entire history. Along with the assets and rights, the company retains its debts, contingencies, contractual obligations, and tax, labor, regulatory, or litigation risks, including those that are not apparent at the time of acquisition: ongoing tax inspections, latent penalties, third-party claims, or liabilities not reflected in the accounts.

For this reason, three elements take on particular importance in a share deal:

• Due diligence. The thorough review —financial, tax, legal, and labor— of the target company is the tool for identifying these risks before signing. The better the due diligence, the better the buyer can anticipate and quantify the contingencies.
• The representations and warranties regime (reps & warranties). The seller contractually declares the state of the company (its tax, labor, and contractual situation, the absence of litigation) and undertakes to indemnify the buyer if those declarations prove inaccurate. Negotiating the scope, the maximum liability cap, and the survival periods of each warranty is one of the central focuses of the contract.
• Price protection mechanisms: specific indemnities for identified risks, price holdbacks, escrow deposits or, increasingly, warranty and indemnity insurance (W&I insurance). All of these serve to appropriately allocate risk between buyer and seller.

Asset deal: a selective acquisition of the business

In an asset deal, the buyer does not necessarily acquire the company, but rather specific assets: machinery, real estate, inventory, brands, patents, customer base, contracts, licenses, or goodwill, all of them necessary to operate a business unit.

Its great advantage is the ability to define the perimeter of the transaction. The buyer chooses which assets to acquire and which assets or liabilities to exclude. This flexibility is particularly attractive when the selling company carries significant risks —financial debt, pending litigation, tax contingencies— or when the buyer is interested in only part of the business.

In exchange, the asset deal tends to be more complex in its legal and operational execution. Each asset must be transferred according to its nature, with its own formalities: public deeds for real estate, registry assignment of industrial and intellectual property rights, amendment of administrative records, transfer of permits, or updating of contracts. A single instrument of transfer does not suffice, as it does with shares.

In addition, there are three points of friction worth anticipating:

• Third-party consents. Many contracts —leases, financing, distribution, supply, alliances, or contracts with public authorities— contain clauses that prevent their assignment without the counterparty's prior authorization (change of control). Without that consent, the buyer cannot step into the seller's contractual position, and a key contract could be left out of the transaction.
• Authorizations and licenses. Certain administrative licenses or concessions are not transferable and require initiating a new authorization process in the buyer's name.
• Transfer of undertaking. When what is transferred constitutes a productive unit with assigned employees, the transfer of undertaking under Article 44 of the Spanish Workers' Statute may be triggered, with mandatory subrogation of the employment relationships and joint and several liability of transferor and transferee for labor and Social Security debts arising before the transfer. This is one of the points most underestimated by buyers who design an asset deal believing they “only keep the good parts.”

Key differences between the two structures

The essential difference lies in the subject matter of the acquisition. In a share deal, the buyer acquires the company: the business remains the owner of its assets and liabilities, and only its owner changes. In an asset deal, the buyer acquires only the assets —and, where applicable, liabilities— expressly included in the contract.

This gives rise to opposing implications for each party:

For the seller, a share deal is usually preferable when they wish to dispose of the entire company and close off their economic exposure to the business. An asset deal, by contrast, is useful when they intend to sell only one line of activity, divest non-strategic assets, or retain the company for other purposes. From a tax standpoint, moreover, the share deal tends to be far more efficient for a corporate seller, as we will see.

For the buyer, an asset deal is attractive when they want to isolate risks, acquire only part of the business, or avoid certain liabilities. But that advantage must be weighed against the higher costs, longer timelines, and greater execution complexity of the individualized transfer of assets.

It is worth emphasizing an important caveat: protection against liabilities in an asset deal is not absolute. There are cases of succession —labor, Social Security, tax (Article 42 of the Spanish General Tax Act on succession in the economic activity), or environmental— that may pass on to the acquirer liabilities of the selling company despite the selection of assets. For this reason, even in an asset deal, a proper legal, tax, and financial review remains essential.

When an asset deal is the preferable choice

An asset deal is particularly advisable in the following scenarios:

1. When the buyer wants to limit exposure to hidden liabilities. If the selling company carries significant debt, litigation, tax contingencies, penalties, or labor claims, acquiring only certain assets reduces —though it does not eliminate— exposure to unwanted liabilities.
2. When only part of the business is of interest. If the buyer does not want the entire company, but only a division, a line of activity, a customer base, a factory, or a brand, the asset deal allows a tailor-made transaction focused exclusively on what generates value for them.
3. When there are difficulties in acquiring the shares. When not all shareholders are willing to sell, or there are restrictive shareholders' agreements, pre-emptive rights, shareholder conflicts, or bylaw restrictions, structuring the operation as an asset deal can be the viable route to acquire the business without having to buy the entire share capital.
4. When a tax-efficient structure is sought for the buyer. The asset deal allows price to be allocated to specific assets and, in certain cases, to generate a higher depreciable base in future years (step-up), something the share deal does not allow, since the assets retain their historical book value within the acquired company.

The tax factor: where the real differences lie

Taxation is one of the factors that most influences the choice of structure, and the interests of buyer and seller tend to be opposed.

For the seller, the taxation of the capital gain depends on its nature and on the chosen structure:

• In the sale of assets by a legal entity, the gain is included in the Corporate Income Tax Here it is important to update a figure that has changed: following Law 7/2024, the general rate remains at 25%, but the rates for small-sized entities are reduced progressively (24% in 2025, 23% in 2026, 22% in 2027, 21% in 2028, and 20% from 2029 for companies with turnover below €10 million). Micro-enterprises (turnover below €1 million) are taxed under a two-bracket scale —in 2025, 21% up to €50,000 and 22% on the remainder— also with reductions in subsequent years. Newly created entities retain the 15% rate during the first period with a positive tax base and the following one.
• In the sale of shares by an individual, the gain is taxed as savings income under Personal Income Tax (IRPF), on a state scale reaching 30% for bases above €300,000 (the effective marginal rate may vary depending on regional legislation).
• In the sale of shares by a legal entity, the exemption under Article 21 of the Corporate Income Tax Act typically applies to gains on the transfer of significant shareholdings (a 95% exemption, leaving an effective rate of around 1.25%). This is often the decisive tax argument in favor of the share deal when the seller is a company —for example, a holding company selling its subsidiary.

To direct taxation must be added indirect taxation, often overlooked in preliminary analyses but capable of significantly altering the cost of the transaction:

• The transfer of shares or equity interests is, as a general rule, exempt from VAT and Transfer Tax (ITP) (Article 314 of the Securities Market Act), except for the anti-avoidance cases affecting companies whose underlying assets are essentially real estate.
• In the asset deal, if the transferred elements constitute an autonomous economic unit capable of operating on its own, the transaction is not subject to VAT (Article 7.1 of the Spanish VAT Act). But beware: if those elements include real estate, its transfer may be subject to the Transfer Tax (TPO) modality of ITP, generating a non-recoverable acquisition cost for the buyer. The line between an “autonomous economic unit” and a “mere transfer of assets” is fact-specific and has given rise to substantial litigation, so it should be analyzed carefully in each transaction.

The practical conclusion is clear: the optimal structure is not decided on general tax criteria, but through a specific modeling of each transaction. And, since what is efficient for one party is rarely efficient for the other, taxation ends up influencing the price negotiation itself.

The sale of a productive unit in insolvency scenarios

The transfer of a set of assets organized as a productive unit is a well-established tool in insolvency and pre-insolvency scenarios, reinforced after the reform of the Consolidated Insolvency Act (TRLC) that transposed Directive (EU) 2019/1023 on restructuring and insolvency.

Through this route, the business is transferred as a going concern with the aim of preserving its value, maintaining employment, facilitating continuity of operations, and maximizing creditor recovery from the insolvency estate. For the buyer, it can represent an opportunity to acquire assets or business units on attractive terms and, in certain cases, with a more favorable regime for the discharge of prior liabilities than in an ordinary transaction, although always subject to a rigorous analysis of the perimeter and the risks.

In these operations, the precise definition of the productive unit —which assets and contracts are included—, the treatment of labor succession, the assumption or discharge of certain debts, and the court approval of the insolvency judge are critical aspects for proper execution.

Conclusion

The choice between an asset deal and a share deal is a strategic, not a formal, decision. There is no universally better structure: the right option depends on the type of business, the objectives of each party, the existence of liabilities or contingencies, the applicable taxation, the available financing, and the degree of complexity the parties are willing to take on.

The share deal is operationally simpler and allows the company to be acquired as a whole, but it exposes the buyer to the company's historical risks —hence the importance of due diligence and a solid warranty regime. The asset deal offers flexibility to define the perimeter and isolate risks, but it requires considerably more complex legal, tax, and operational execution. And in both cases, taxation —direct and indirect— can be the decisive factor.

At Maraz Corporate Finance, we have extensive experience in corporate operations and company sale processes. We support business owners, buyers, and investors in the analysis, structuring, and execution of transactions, with the goal of maximizing the value of the deal and reducing the associated risks.

Javier de Rojas Roca de Togores

Partner – Maraz Corporate Finance