An asset deal is one of the two basic ways to buy a business. Instead of taking over the company as a whole, you buy out individual assets: the machines, the fittings, the inventory, the customer base, the brand, ongoing contracts. You pick exactly what you actually need.
The difference from a share deal is a big one. There you buy the shares in the company and take over the business with everything inside it, including old liabilities and old debt. In an asset deal the company shell stays with the seller. You only take over the assets you have agreed on.
Each asset and each contract is transferred to you individually. Because this happens item by item, ongoing contracts often need the other side's consent. The landlord has to agree to the transfer of the lease, suppliers to their contracts, and so on.
One important point is the employees. If you take over the business as a going concern, the employment contracts generally transfer with it automatically. This is the transfer of undertaking. So you cannot simply cherry-pick which staff to keep at the point of purchase.
For small businesses and sole proprietorships, the asset deal is often the only possible route. A sole proprietorship has no shares to sell in the first place: there is simply nothing for a share deal. That is why bakeries, cafés, trade businesses and small shops almost always involve an asset deal.
For business sellers
As the seller, in an asset deal you keep your company shell. Only the individual assets of your business are sold. That also means your old liabilities, such as a running bank loan, generally stay with you unless the buyer expressly takes them on. After the sale you keep servicing that remaining debt yourself and then wind down your company in an orderly way.
Talk to your tax advisor early. The proceeds from the individual assets are treated differently than the sale of shares, and the rules vary depending on your legal form and age. You will find more on this under tax on selling a business. A good advisor helps you avoid nasty surprises and structure the price so that more is left for you in the end.
For corporate buyers
For you as the buyer, the asset deal is often the safer route. You take over only the assets and contracts you actually want. Experts call this cherry-picking. Old risks and old liabilities you might not even know about generally stay with the seller. You are not buying a pig in a poke, but clearly defined things.
On top of that comes a tax advantage. You can allocate the purchase price across the acquired assets and depreciate it over the years. That lowers your tax burden and makes the purchase cheaper than it looks at first glance. The trade-off: because each contract is transferred individually and some need consent, an asset deal is a bit more fiddly to handle.
Example
Picture a small bakery with a café. The owner wants to retire, and you take over via an asset deal. What you buy: the oven and kitchen equipment (about 90,000 EUR), the shop fittings and furniture (about 40,000 EUR), the inventory (about 10,000 EUR), plus recipes, brand and customer base (about 80,000 EUR). That adds up to a purchase price of 220,000 EUR. The existing lease for the shop transfers with it, and the landlord consents. The old bank debt of 60,000 EUR from the last oven refit stays with the seller, because you do not take it on. You start debt-free with an established business, a loyal customer base and a name people in town already know.
FAQ
What is the difference between an asset deal and a share deal?
In an asset deal you buy the individual assets of the business: machines, customer base, contracts. In a share deal you buy the shares in the company and take over the business as a whole, including all its debts and old liabilities.
Why do an asset deal instead of starting from scratch?
Because you save yourself years of building up. In an asset deal you take over a running business with a customer base, established processes and revenue from day one. Buy instead of build means you don't start at zero: you step in where others have spent years building.
Do I take over the old debts in an asset deal?
Generally no. Old liabilities such as a running bank loan stay with the seller unless you expressly take them on. That is exactly what often makes the asset deal so safe for buyers.
What happens to the employees?
If you take over the business, the employment contracts usually transfer with it automatically. This is the transfer of undertaking. The staff are protected, and you cannot simply pick and choose who to keep at the point of purchase.
Do I need consent for ongoing contracts?
Often yes. Because each contract is transferred individually in an asset deal, the other side frequently has to agree, for example the landlord for the lease or key suppliers. It is best to clarify this early in the buying process.
Is an asset deal common for small businesses?
Yes, very. Sole proprietorships and small businesses in particular often have no shares to sell at all. That is why the asset deal is the normal route for bakeries, cafés, trades and small shops.
Does an asset deal have tax advantages for me as the buyer?
Yes. You can allocate the purchase price across the acquired assets and depreciate it over the years. That lowers your tax burden and is a key reason many buyers prefer the asset deal.
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