Purchasing assets allows buyers to divide the purchase price between the assets to reflect their market value. This increases depreciation deductions that result in future tax savings. Buying shares usually involves buying an entire company as a business, including all company shares outstanding. If an individual company, company or limited liability company (GMBH) is involved, the term used (share purchase) would be slightly different (z.B interest in membership). In the case of a stock purchase, the buyer is in fact on the back of the seller and the business continues uninterrupted. In the absence of a written agreement to the contrary, the seller no longer has any interest or obligation for assets, commitments or operating transactions. From an accounting point of view, the entity`s assets and liabilities are supported and/or depreciated in the same way as before the transaction. From a tax point of view, the seller recognizes a profit or loss based on the difference between the selling price and its current base in the warehouse. As a result, sellers tend to prefer share purchase contracts. If the transaction is structured as a share purchase, the buyer should perform additional due diligence to ensure awareness of all liabilities covered.
Conversely, the buyer of a California business will generally prefer an asset acquisition transaction, as the buyer can choose which assets to be purchased and which liabilities should be covered. This is particularly important for a buyer when the entity has a large number of real or potential liabilities and when it is difficult to quantify the amount of these liabilities. As explained above, a buyer should perform additional due diligence when the agreement is structured as a share purchase. The determination and taxation of behaviours is an important objective of the APA.  The buyer must represent his power to acquire the asset. The seller must represent his power to sell the asset. In addition, the seller argues that the purchase price of the asset is equal to its value and that the seller is not in financial or legal difficulty. Here are several advantages of an asset purchase transaction: buyers can also benefit from preferential tax treatment when buying shares. The value can be tax-depreciated by the buyer for years. In states that impose sales or transfer taxes on the sale of assets, a share transaction can avoid some or all of these taxes. Stock sellers must record a profit or loss on the transaction for tax purposes, depending on the sale price of the stock and the seller`s base in the stock.
A buyer will normally prefer to buy a company`s assets, while the seller prefers to sell the shares. The reason is that an investment purchase allows a buyer to choose exactly what assets they are buying and to identify precisely which liabilities they want to assume. Asset purchase transactions are generally more complicated because ownership of assets and liabilities and related contracts must indeed be transferred, sometimes by filing documents with government agencies that may inc on additional costs. Other considerations include the possible transfer of the company name, trade names, fictitious company names, trademarks and the reintegration of staff by the purchasing unit.