An acquisition method in which the buyer selects and acquires specific assets and liabilities of a business, rather than purchasing the company that owns them.
It is not always advisable to buy the entire company. Sometimes, what has value is the business — its customers, its machinery, its brand, its contracts — but the legal entity that contains it carries liabilities, contingencies, or problems the buyer neither wants nor should assume. For those situations there is the asset purchase: the buyer selects what to acquire and leaves the rest behind. It is the surgical alternative to a share deal.
In an asset purchase (asset deal), the buyer acquires the assets that constitute the business directly: machinery, inventory, customer contracts, intellectual property, brand names, real estate, and the specific liabilities it agrees to assume. The selling entity is not transferred — it continues to exist as a legal person (typically to be wound down or redirected to another activity).
The conceptual difference from a share purchase is fundamental:
Companies in insolvency proceedings. A going-concern purchase during the liquidation phase is, technically, an asset deal. The buyer acquires the business assets without assuming the debtor’s liabilities (subject to certain legal exceptions). It is the most common way of rescuing insolvent businesses.
Significant liabilities or contingencies. If due diligence reveals hidden liabilities, major tax contingencies, high-risk litigation, or environmental liabilities, the buyer may prefer an asset deal to leave those risks in the selling entity.
Purchase of a division or business line. When the buyer does not want the entire company but only a part of it (a product line, a geographic division, a customer segment), an asset deal is the only option — unless the division is already incorporated as a separate entity.
Tax reasons for the buyer. In an asset deal, the buyer can amortise the acquired assets (including goodwill) from their acquisition value, generating a tax saving not available in a share deal (where the buyer inherits the historical tax basis of the assets in the acquired company’s balance sheet).
Cherry-picking assets and liabilities. The buyer chooses what to acquire. It can exclude non-operational assets, unfavourable contracts, pending litigation, and contingent liabilities.
Protection from hidden liabilities. In principle, the buyer does not inherit the selling entity’s liabilities (with important exceptions in employment, tax, and social security matters).
Tax benefit of amortisation. Goodwill arising in an asset deal is tax-deductible (amortised over up to 20 years), reducing the buyer’s taxable income in the years following the acquisition.
Updated tax basis. All acquired assets enter the buyer’s balance sheet at acquisition value (not at historical book value), generating higher tax-deductible amortisation.
Individual asset transfer. Each asset must be transferred individually: real estate requires notarial deeds and registry filings, contracts require counterparty consent (assignment of contractual position), vehicles require title transfers, and licences may need to be reapplied for. The process is significantly more complex and costly than transferring shares.
Tax burden for the seller. The selling entity is taxed on the difference between the sale price and the net book value of the assets. If the shareholder then wants to extract the proceeds (via dividends or liquidation), a second layer of tax arises. The combined tax burden can be substantially higher than in a share deal.
Business succession for employment purposes. If the buyer acquires the productive unit (not isolated assets), a business succession may be triggered under employment law. This means mandatory assumption of all workers attached to that unit, with their full terms and conditions and seniority.
VAT and transfer taxes. The transfer of assets may be subject to VAT or transfer tax, unless the transfer qualifies for the exemption applicable to the transfer of a going concern (branch of activity). Tax planning is essential.
An industrial catering company in Madrid enters insolvency with 35 employees, 4 million in revenue, assets (kitchen equipment, delivery vehicles, inventory) valued at 800,000 euros, and total debts of 2.5 million (bank debt, suppliers, tax authorities).
Blue Mountain presents a going-concern purchase offer during the liquidation phase: 1.2 million euros for the operational assets (equipment, vehicles, inventory, brand, customer contracts), with assumption of the employment contracts of 30 of the 35 employees. The offer includes a commitment to maintain operations for a minimum of two years.
The insolvency administrator accepts because the offer significantly exceeds the estimated piecemeal liquidation value (500,000 euros), preserves jobs, and generates a higher return for creditors. The five employees not transferred receive their statutory severance from the insolvency estate.
Blue Mountain integrates the operation into its services platform, professionalises commercial management, and recovers two contracts lost during the insolvency process. Within 18 months, revenue reaches 5.5 million with an EBITDA margin of 12%.
If a business succession is triggered (acquisition of a productive unit that retains its identity), assumption is mandatory for all workers attached to that unit, with full terms and seniority. You cannot select individually. If the acquisition is limited to isolated assets (without constituting an autonomous productive unit), there is no employment succession obligation.
Not necessarily. The asset deal provides better protection against hidden liabilities and offers tax benefits through amortisation, but it is more complex to execute, generates a higher tax burden for the seller (which may increase the asking price), and requires individual transfer of each asset and contract. In most mid-market transactions, the share deal remains preferred for its simplicity. The asset deal is reserved for specific situations where liability risk justifies the added complexity.
The buyer pays VAT to the seller as part of the price (if the transaction is subject to and not exempt from VAT). However, if a branch of activity is transferred as a going concern, the transaction may be outside the scope of VAT entirely, eliminating the tax cost. The tax treatment of each transaction must be analysed on a case-by-case basis with a tax advisor.
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