Practical guide
These points support an initial assessment. The decisive legal, tax, financial and operational questions depend on the business, the people involved and the chosen transaction structure.
Understand exactly what changes hands
In a share deal, the buyer acquires shares or quotas in the existing legal entity. The company generally remains the contracting party, employer, owner of assets and holder of liabilities, subject to specific contractual or regulatory provisions. In an asset deal, the parties list the assets, contracts, rights and liabilities to be transferred; anything not included normally stays with the seller. A vague label is therefore insufficient. The term sheet and due diligence must describe the actual perimeter, excluded items, cash, debt, working capital and any business elements needed for continuity.
- identify the legal seller, buyer and transferred object
- list included and excluded assets, rights and liabilities
- define treatment of cash, debt, stock and working capital
Compare liabilities, contracts and third-party consents
A share purchase leaves historical obligations within the acquired company, so due diligence and contractual protections are central. An asset deal can isolate selected elements, but liabilities may still transfer by law or agreement and the buyer must ensure the operating package is complete. Contracts, leases, licences and permits may require consent in either structure, particularly where change-of-control clauses apply. Build a consent and transfer matrix early. A structure that looks cleaner legally can become impractical if essential customers, premises, software or approvals cannot move by the planned closing date.
- map historical liabilities and applicable transfer rules
- review assignment and change-of-control provisions
- track every consent, permit and counterparty action
Address employees and operational continuity
In a share deal, the employer entity remains the same even though its ownership changes. In an asset deal involving a business or part of one, Articles 333 and 333a of the Swiss Code of Obligations may govern the transfer of employment relationships and information or consultation duties. The parties also need a practical plan for payroll, benefits, access, equipment, work location and communication. Legal analysis should be completed before promises are made to staff. The goal is to protect rights and ensure the business can serve customers immediately after closing without uncertainty over who employs key people.
- confirm the employer before and after completion
- assess statutory information and consultation requirements
- coordinate payroll, benefits, access and communications
Model tax, price allocation and financing together
The seller and buyer may have different tax preferences, and the outcome depends on legal form, residence, assets and transaction details. In an asset deal, allocation of the price among assets can affect depreciation, gains and later accounting. In a share deal, the buyer finances the acquisition of an entity whose cash generation must support the future structure. Tax analysis should therefore run alongside valuation and financing, not after a price has been agreed in isolation. Model net proceeds, acquisition cost, available cash flow and implementation expenses for each realistic structure.
- obtain transaction-specific Swiss tax advice early
- document and support any purchase-price allocation
- compare seller proceeds and buyer economics together
Align due diligence, agreement and closing mechanics
The review should follow the chosen structure while still testing alternatives until the decision is settled. A share deal needs evidence about the full company and protections for historical matters; an asset deal needs proof of ownership, transferability and completeness of the selected package. The agreement then describes warranties, indemnities, price mechanics, conditions and deliverables accordingly. Closing checklists differ as well: share registers and corporate approvals on one side, individual assignments and asset deliveries on the other. Every critical operating element should have a clear legal path and responsible owner.
- adapt the diligence scope to the transaction perimeter
- draft protections for the risks that actually remain
- verify a closing step for each essential business element
Sources and further information
Frequently asked questions
Is an asset deal always safer for the buyer?
No. Selecting assets can reduce exposure to some historical liabilities, but statutory transfers, contractual assumptions and practical dependencies still matter. The buyer may also need numerous assignments, consents, permits, new contracts and operating arrangements. If a critical customer agreement or licence cannot transfer, the selected assets may not form a viable business. Safety depends on the exact perimeter, law, evidence and implementation rather than the transaction label alone.
Can a sole proprietorship be sold through a share deal?
A sole proprietorship does not have shares in a separate legal entity, so its business is generally transferred through assets, contracts and obligations rather than a share purchase. The parties must specify what moves and address customers, suppliers, employees, permits, name, inventory, receivables and liabilities. Depending on the objectives, a prior restructuring may be considered, but that requires early legal and tax advice and should not be undertaken merely to copy a corporate transaction structure.
What happens to customer contracts in each structure?
In a share deal, the same company usually remains the contracting party, although change-of-control clauses or regulatory rules may require notice or consent. In an asset deal, contracts normally require assignment, assumption or replacement according to their terms and applicable law. The parties should create a contract matrix showing value, term, termination, transfer rules, counterparty and required action. Commercial relationships also need careful communication even where a formal consent is not legally required.
Why might the seller prefer a share deal?
A share deal can offer a cleaner transfer of the legal entity and may produce a different tax or liability outcome for the seller, depending on the circumstances. It may also preserve contracts and operations more easily. The buyer, however, acquires the company with its history and will seek evidence and protection. Preference alone does not determine the structure; both sides need to compare net economics, risk allocation, consents, financing and the likelihood that the chosen structure can actually close.
When should the transaction structure be decided?
The parties should identify the likely structure early enough to guide valuation, financing, tax work and due diligence, but avoid locking it before the major facts are understood. An indicative proposal or LOI can state the intended structure and the assumptions that remain open. Once material contracts, liabilities, taxes and transfer requirements have been reviewed, the structure should be confirmed before detailed agreement drafting and closing preparation proceed too far.