The first step in the sale and purchase of business assets involves deciding between an asset deal and a share deal. In the hotel sector, this decision is crucial and depends on multiple factors such as tax strategy, risk assessment, and the corporate structure of the business in question.
The choice between an asset deal and a share deal involves significant considerations. In an asset deal, the purchase focuses on acquiring specific assets and liabilities, often allowing for the exclusion of hidden liabilities, except those inherent by law such as tax, labor, or environmental liabilities. This gives the buyer the ability to select precisely which elements of the business they wish to acquire, providing clarity and limiting certain risks.
Conversely, a share deal involves the acquisition of shares in the company, and thus indirect ownership of all its assets and liabilities, including those undisclosed or unknown at the date of purchase. This may increase risk exposure but also allows for a simpler transfer in terms of formalities, especially when dealing with assets that require specific registrations, such as real estate.
