Asset Deal or Share Deal: The Choice That Shapes the Whole Transaction
Share deal or asset deal: the question sometimes surfaces so late in a sale that it gets settled by default rather than by choice. It deserves to be asked before the letter of intent, because it sets the seller's tax treatment, the scope of warranties to be given, and what the buyer actually acquires from the business.
What each structure actually transfers
In a share deal, the seller transfers the shares of an SA or the units of a Sàrl. The company itself does not change: it keeps its legal identity, its contracts, its employees, its debts and, where relevant, any ongoing disputes. Only its ownership changes hands.
In an asset deal, the company, or the sole proprietor, sells assets individually listed in the contract: machinery, inventory, the client portfolio, the trademark, sometimes the operating premises. The buyer can receive these into a newly formed entity or an existing one. Whatever the contract does not name stays exactly where it was, benefits and liabilities alike.
The comparison
| Criterion | Share deal (sale of shares) | Asset deal (sale of assets) |
|---|---|---|
| What changes hands | The shares or units; the company remains the same legal entity | Assets listed individually; the buyer can receive them into its own entity |
| Liabilities and obligations | Transferred automatically, including risks unknown at the time of sale | Stay with the seller in principle, unless expressly assumed |
| Tax treatment for the seller | Capital gain on privately held shares, in principle tax exempt | The price flows through the company, taxed as profit, then distributed: two layers of taxation |
| Transfer of contracts and staff | Automatic, the company remains party to its contracts, unless a change of control clause triggers | Each contract, lease and permit transferred individually; staff governed by article 333 of the Code of Obligations |
| Scope of seller warranties | Broad, the buyer inherits the whole history and negotiates accordingly | More targeted, limited to the assets actually transferred |
| Selling one activity only | Rarely possible without prior restructuring | Well suited, the buyer chooses the exact scope |
| Sole proprietorship | Not applicable, there are no shares to sell | The only option available |
Two opposing logics
The seller. A shareholder in an SA or a member of a Sàrl almost always has a tax reason to argue for a share deal: the gain on shares held as private wealth is, in principle, exempt from income tax, while the proceeds of an asset deal flow through the company before reaching the owner and carry a two-tier tax charge. That advantage comes with a condition of its own: the qualification as private or business wealth has to be established before the sale, not argued after the fact. A share deal also keeps the closing simpler: no contract, lease or permit to transfer one by one, no negotiation with every counterparty to secure its consent.
The buyer. One who uncovers an uncertain history during due diligence, a dormant dispute, an open product warranty claim, an unprovisioned tax exposure, would rather isolate what it acquires than inherit an entire entity. An asset deal lets it name exactly what it is buying, chosen assets and chosen contracts, without the obligations it does not want. That preference runs into an operational reality: transferring employment contracts, leases, operating permits and client contracts one by one stretches the transaction timeline noticeably, with a real risk that a counterparty refuses the transfer or uses the moment to renegotiate its own terms.
Compromise and exceptions
In most of the mandates I run on Swiss SMEs structured as an SA or a Sàrl, the structure that prevails is still the share deal, paired with precise seller warranties on the sensitive points identified during due diligence, and often with part of the price held in escrow until the limitation periods on the main risks run out. That compromise brings the two structures economically closer without changing their tax treatment: the seller keeps the share deal's tax advantage, the buyer gets contractual protection that offsets the absence of asset-by-asset selection.
Three situations reverse this natural preference for a share deal anyway. A sole proprietorship has no shares to sell, so an asset deal is the only structure available. Selling in lots, when different activities interest different buyers, fits an asset-by-asset split more naturally than the sale of a single, indivisible block of shares. And a buyer worried enough about a specific risk, environmental or contractual, can make its offer conditional on an asset deal, even if that means paying a higher price to offset the extra tax cost this imposes on the seller.
Which one fits whom
A shareholder or member of an SME structured as a capital company, with no major identified liability and no need to carve out part of the activity, has every reason to push for a share deal from the letter of intent onward, while anticipating the warranties this will require in exchange. A sole proprietor has no such choice: an asset deal follows from the legal form itself. And a seller facing a buyer who insists on an asset deal to isolate a specific risk gains more from negotiating the price and the exact scope of the assets sold than from holding out for a tax preference it cannot impose alone.