The same target company can become three different deals depending on how the transaction is structured. According to Beyond Borders by Dr Uppiliappan Gopalan, few decisions in cross border M&A carry more weight than this one.
What Travels With the Shares
A share purchase gives the buyer ownership of the company itself, employees, contracts, licences and corporate history generally remaining intact. History travels with the shares as well, tax disputes, employee claims, environmental obligations and unknown contingencies all remain inside the acquired company.
What an Asset Purchase Actually Buys
An asset purchase allows a buyer to select specific factories, technology, contracts or operating units, defining exposure more selectively, though certain liabilities may still transfer by law, and every required asset needs a valid route into the buyer’s ownership.
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