Asset deal or share deal: what's the difference for an acquirer?

You have identified a company that interests you. Before even discussing price, one essential question arises: are you going to acquire the company itself, or only some of its assets?

In practice, these two transactions (commonly known as an asset deal and a share deal) produce very different effects. They determine what you actually acquire, the risks you take on, how contracts and employees are treated, and the scope of the due diligence to carry out before submitting an offer.

For an acquirer looking at a distressed company, understanding this distinction is particularly important.

The difference at a glance

Buying a company: you take on its history along with it

Buying a company means acquiring its shares.

Legally, nothing changes at the level of the company itself: it retains its legal personality, its enterprise number, its contracts, its assets and its debts. Only its owners change.

It is therefore the company that continues to carry its liabilities: bank loans, supplier debts, tax or social security debts, pending disputes, guarantees granted in the past, or commitments that were not identified at the time of the acquisition.

For the acquirer, this means that thorough due diligence is generally essential before committing.

A share purchase is the classic form of transfer for a healthy company, or one whose history is sufficiently well documented to be reviewed through due diligence and whose identified risks can be addressed contractually.

Acquiring assets: defining precisely what you want to buy

An asset deal works differently. You are not buying the company: you are acquiring certain elements of its business.

This can include, for example:

• equipment and machinery;
• stock;
• a business undertaking (fonds de commerce);
• a brand or other intellectual property rights;
• a customer database;
• a website or a technology;
• certain contracts;
• licences or permits, where transferable;
• and, depending on the legal context, some or all of the employees.

The scope of the transaction is therefore much more targeted.

This structure is particularly common when a company is in financial difficulty: certain assets or activities may retain real economic value even though the company holding them carries debts or a history that would make a share purchase unattractive.

What this difference means in practice for the acquirer

Debts

Unlike a share purchase, an asset deal does not, in principle, involve taking on the company's historical liabilities. Bank, supplier or tax debts therefore remain with the selling company.

Certain obligations may nonetheless attach to the assets or the activity acquired, particularly regarding employees. The exact scope of the transaction must therefore always be checked case by case.

Existing contracts

In an asset deal, the contracts needed to run the business do not necessarily follow the assets automatically. The commercial lease, certain supplier contracts, software licences or distribution agreements generally need to be formally transferred. Depending on their terms, the counterparty's consent may also be required.

In a share deal, the company remains party to the same contracts. These therefore continue in principle, subject in particular to any change-of-control clauses.

For the acquirer, quickly identifying the contracts essential to continuing the business is therefore critical.

Employees

Employee-related matters require particular attention. Depending on the nature of the transaction and the legal context in which it takes place, certain rules may trigger the transfer of employees or govern the conditions under which some employees can be taken on.

An asset deal should therefore not be understood as giving the acquirer complete freedom to select individual employees. The treatment of employees must be assessed in light of the specific structure of the transaction.

Price and timing

An asset deal often allows the acquirer to focus its analysis and offer on the elements that hold real economic value. It can therefore be more targeted than a full share purchase.

However, when the transaction takes place in the context of a bankruptcy or restructuring, the process can move quickly: site visits, access to information, submission of offers and the transfer or resumption of operations may all take place within a matter of weeks. For the acquirer, the ability to assess an opportunity quickly can therefore be a significant advantage.

Why are asset deals so common for distressed companies?

In a bankruptcy, the court-appointed insolvency practitioner (curateur in Belgium) is responsible for realising the bankrupt company's assets in the interests of creditors as a whole.

Prospective acquirers therefore generally submit an offer covering all or part of the business and its assets: machinery, equipment, stock, business assets, customer relationships, intellectual property, or other elements allowing the business to continue operating.

An asset deal is not limited to bankruptcies, however. It can also take place as part of a negotiated restructuring or a business transfer organised as part of another court-supervised process.

In every case, the acquirer's reasoning remains similar: which assets do I need to operate the business, what are they worth to me, and what risks come with acquiring them?

A concrete example

Take an industrial SME with:

• machinery and equipment useful for production;
• a portfolio of recurring customers;
• an operational team;
• a brand recognised in its market;

but at the same time carrying significant debt to banks and suppliers.

By buying the shares, the acquirer takes on the company that holds these assets, but also the legal structure in which that debt remains.

Under an asset deal, by contrast, the acquirer can focus its offer on the elements needed to keep the business running, without acquiring the company itself. The economics of the transaction can then be entirely different.

A distressed company is not necessarily a worthless business

This is probably one of the main misconceptions surrounding the acquisition of distressed companies.

A company's difficulties can result from debt that has grown too large, an unsuitable cost structure, a funding problem, poor allocation of resources, or simply a setback along the way. That does not mean all of its assets have lost their value.

A recurring customer base, a brand, a commercial location, a licence, a technology, know-how, an operational team, or production facilities can all retain significant value.

For an acquirer, the challenge is therefore not just finding a "business for sale". It is about identifying the assets and activities capable of generating more value in their hands than within the company's current structure. This is precisely where some of the highest-potential acquisition opportunities lie.

How does an acquisition through Caldeo work?

When Caldeo is engaged on a transaction, we organise a structured process designed to allow interested acquirers to assess the opportunity quickly. Depending on the transaction, the process may include:

• an initial presentation of the opportunity;
• signing a non-disclosure agreement (NDA);
• access to the available information and a data room;
• discussions with the seller, management or the court-appointed insolvency practitioner;
• a site visit and inspection of the business or its assets;
• requests for additional information;
• and the submission of a structured offer.

The goal is to let the acquirer quickly answer three essential questions: what am I acquiring, what risks are associated with it, and what price am I prepared to offer?

Caldeo identifies and structures opportunities to acquire businesses, activities and assets in Belgium, particularly in the context of bankruptcy, restructuring or accelerated sale processes.