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

Asset deal vs share deal: two ways of structuring a transaction

In an M&A transaction, one of the first decisions buyer and seller face is not the price, but how to structure the deal.

There are two major alternatives: acquiring the shares of the company that owns the business — known as a share deal — or acquiring certain assets and, where applicable, the liabilities linked to them — the asset deal.

The choice between the two is not a merely formal matter. It has significant consequences at the financial, tax, legal, employment, contractual and operational levels, and it conditions both the allocation of risk between the parties and the effective price the seller ultimately receives. That is why, before starting a sale, it is worth analysing which structure maximises the value of the transaction and minimises the risks for each party. There is rarely a universal answer: what is optimal for the buyer may be penalising for the seller from a tax perspective, 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 takes control of all its assets, contracts, commercial relationships, licences, employees and the other elements that make up the company. The company remains the same legal person; only its ownership changes.

The main advantage of this structure is its operational simplicity: instead of transferring each asset individually, ownership of the shares is transferred. That is why it is the usual formula when the buyer wants to acquire the whole business and preserve the continuity of the activity without altering the existing legal structure. Contracts, licences 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, employment, regulatory or litigation risks, even those not evident at the time of the acquisition: ongoing tax inspections, latent penalties, third-party claims or liabilities not surfaced in the accounts.

For this reason, three elements take on special relevance in a share deal:

• Due diligence. The exhaustive review — financial, tax, legal and employment — of the target company is the tool for identifying those risks before signing. It is worth having a clear financial due diligence checklist and understanding how it differs from an audit: the better the due diligence, the better the buyer can anticipate and quantify contingencies.
• The representations and warranties regime (reps & warranties). The seller contractually represents the state of the company and undertakes to compensate the buyer if those representations prove inaccurate. Negotiating the scope, the maximum liability limits (cap) and the survival periods is one of the central focuses of the contract.
• Price protection mechanisms: specific indemnities, retentions of part of the price, deposits in an escrow account (escrow) or warranty and indemnity insurance (W&I insurance). All of these serve to allocate risk appropriately between buyer and seller.

Asset deal: selective acquisition of the business

In an asset deal, the buyer does not necessarily acquire the company, but specific assets: machinery, property, inventories, brands, patents, customer portfolio, contracts, licences or goodwill, all of them necessary to operate a business unit.

Its great advantage is the ability to delimit the perimeter of the transaction. The buyer chooses which assets it acquires and which assets or liabilities it prefers to exclude. This flexibility is especially attractive when the selling company carries significant risks — financial debt, pending litigation, tax contingencies — or when only part of the business is of interest to the buyer.

In return, the asset deal is usually more complex in its legal and operational execution. Each asset must be transferred according to its nature, with its own formalities: public deeds for property, registered assignment of industrial and intellectual property rights, amendment of administrative registers, transfer of permits or updating of contracts. A single instrument of transfer is not enough, as it is 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 authorisation (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.
• Authorisations and licences. Certain administrative licences or concessions are not transferable and require a new authorisation procedure to be started in the buyer's name.
• Business succession. When what is transferred constitutes a productive unit with assigned employees, business succession under article 44 of the Spanish Workers' Statute may be triggered, with mandatory transfer of employment relationships and joint and several liability of transferor and transferee for employment and Social Security debts predating the transfer. It is one of the points most underestimated by buyers who design an asset deal thinking they are "keeping only the good parts".

Main 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 company continues to own 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.

From this flow opposite implications for each party:

For the seller, a share deal is usually preferable when it wants to dispose of the entire company and close its economic exposure to the business. An asset deal, by contrast, is useful when it intends to sell only one line of activity, divest non-strategic assets or keep the company for other purposes. From a tax perspective, moreover, the share deal is usually far more efficient for a corporate seller, as we shall see.

For the buyer, the asset deal is attractive when it wants 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 transferring assets individually.

An important nuance is worth stressing: protection against liabilities in an asset deal is not absolute. There are cases of succession — employment, Social Security, tax (article 42 of the General Tax Act, for succession in the economic activity) or environmental — that can transfer liabilities of the transferring company to the acquirer despite the selection of assets. That is why, even in an asset purchase, the prior legal, tax and financial review remains essential.

When an asset deal is advisable

The asset deal is especially advisable in the following cases:

1. When the buyer wants to limit its exposure to hidden liabilities. If the company carries significant debt, litigation, tax contingencies, penalties or employment claims, acquiring only certain assets reduces — though does not eliminate — exposure to unwanted liabilities.
2. When only part of the business is of interest. If the buyer does not want the whole company, but a division, a line of activity, a customer portfolio, a factory or a brand, the asset deal makes it possible to design a tailored transaction, focused exclusively on what generates value for it.
3. When there are difficulties in acquiring the shares. When not all shareholders are willing to sell, there are restrictive shareholders' agreements, pre-emption rights or shareholder conflicts, structuring the transaction as an asset purchase may be the viable route to acquiring the business without buying all of the share capital.
4. When a tax-efficient structure is sought for the buyer. The asset deal makes it possible to allocate price to specific assets and, in certain cases, generate a higher depreciable base in future years (step-up), something the share deal does not allow, since the assets keep their historical book value within the acquired company.

The tax factor: where the differences really lie

Taxation is one of the factors that most conditions the choice of structure, and the interests of buyer and seller are usually opposed.

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

• In a sale of assets by a legal entity, the gain is included in the Corporate Income Tax base. 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 companies 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 on a two-bracket scale — in 2025, 21% up to €50,000 and 22% on the rest — also with reductions in subsequent years. Newly created entities keep the 15% rate for the first period with a positive base and the following one.
• In a sale of shares by an individual, the gain is taxed as savings income under personal income tax (IRPF), on a state scale that reaches 30% for bases above €300,000 (the effective marginal rate may vary according to regional rules).
• In a sale of shares by a legal entity, the exemption under article 21 of the Corporate Income Tax Act for gains on the transfer of significant shareholdings usually applies (95% exemption, leaving an effective rate of around 1.25%). This is frequently the decisive tax argument in favour of a share deal when the seller is a company — for example, a holding company selling its subsidiary. Prior planning of the corporate structure is therefore decisive for the net result of the transaction.

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

• The transfer of shares is, as a general rule, exempt from VAT and from transfer tax (ITP) (article 314 of the Securities Market Act), save for the anti-avoidance cases affecting companies with an essentially real estate underlying.
• In an asset deal, if the elements transferred constitute an autonomous economic unit capable of operating on its own, the transaction is not subject to VAT (article 7.1 of the VAT Act). But beware: if those elements include real estate, its transfer may be subject to transfer tax (TPO) under ITP, generating a non-recoverable acquisition cost for the buyer. The boundary between an "autonomous economic unit" and a "mere transfer of goods" is case-specific and has generated abundant litigation, so it should be analysed carefully in each transaction.

The practical conclusion is clear: the optimal structure is not decided on general tax criteria, but through specific modelling of each transaction. And, since what is efficient for one party is rarely so 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 organised as a productive unit is an established tool in insolvency and pre-insolvency scenarios, strengthened following the reform of the Consolidated Text of the 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 the continuity of the activity and maximising creditor recovery from the estate. It is one of the typical settings for a sale of a company in crisis (Distressed M&A), where the buyer can acquire assets on attractive terms and, in certain cases, with a more favourable regime of release from prior liabilities.

In these transactions, the precise delimitation of the productive unit — which assets and contracts are included — the treatment of employment succession, the assumption of or release from certain debts and court approval by the insolvency judge are critical aspects for correct execution.

Conclusion

The choice between an asset deal and a share deal is a strategic decision, not a formal one. 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 financing available 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 warranties regime. The asset deal offers flexibility to delimit the perimeter and isolate risks, but requires considerably more complex legal, tax and operational execution. And in both cases, taxation — direct and indirect — can tip the balance decisively.

At Maraz Corporate Finance we have experience in corporate transactions and company sale processes. We support business owners, buyers and investors in the analysis, structuring and execution of M&A transactions, with the aim of maximising the value of the deal and reducing the associated risks. Contact our team to structure your transaction.

Javier de Rojas Roca de Togores

Partner - Maraz Corporate Finance

Frequently asked questions about asset deals vs share deals

What is the difference between buying assets and buying the shares of a company?

In a share deal the entire company is acquired: the buyer takes control of all its assets, contracts and employees, but also inherits all of its liabilities and risk history. In an asset deal only specific items are acquired — machinery, brands, customer portfolio, etc. — which allows the perimeter to be defined and debts or contingencies to be left out, at the cost of more complex legal execution.

Which is more advantageous for tax purposes, buying assets or buying shares?

It depends on who is selling. For a seller that is a legal entity, the share deal is usually far more efficient because it can apply the exemption under article 21 of the Corporate Income Tax Act (95% exemption, effective rate of around 1.25%). For the buyer, by contrast, the asset deal can be more attractive because it allows the price to be allocated to the assets and generates a higher depreciable base (step-up). Since the interests are opposed, taxation ends up influencing the price negotiation.

In an asset deal, is the buyer free of all liabilities?

No. Protection against liabilities is not absolute. There are cases of succession — employment (article 44 of the Workers' Statute), Social Security, tax (article 42 of the General Tax Act, for succession in the activity) or environmental — that can transfer liabilities to the buyer despite the selection of assets. That is why, even in an asset purchase, prior due diligence remains essential.

How is VAT applied in an asset purchase?

If the items transferred constitute an autonomous economic unit capable of operating on its own, the transaction is not subject to VAT (article 7.1 of the VAT Act). But if those assets include real estate, their transfer may be subject to transfer tax (TPO under ITP), a non-recoverable cost for the buyer. The boundary between an "autonomous economic unit" and a "mere transfer of goods" is case-specific, so it should be analysed in each transaction.

What is the sale of a productive unit in insolvency proceedings?

It is the transfer of a set of assets organised as a going concern within an insolvency or pre-insolvency scenario. Its aim is to preserve the value of the business, maintain employment and maximise creditor recovery. For the buyer it can be an opportunity to acquire assets on attractive terms and, in certain cases, with release from prior liabilities, always subject to court approval and a rigorous analysis of the perimeter and employment succession.