The only required transfer is of the shares of the company itself (and possibly an assignment of shareholder loans).Īn asset sale may trigger the need to obtain more third party consents to the transfer of the assets (which can be a time consuming and expensive process) than would a share sale, where identifying and dealing with any change of control provisions in contracts, leases, licences and permits can be less burdensome. Share sales are commonly less complex than asset sales: An asset sale will require transfer documentation for all of the assets being transferred (real property, permits and licences, leases, contracts, equipment and vehicles, intellectual property, etc.).īy contrast, under a share sale, all of the assets of the target company remain with the company. Therefore, unless the target company terminates certain employees and pays severance pay before closing, the target company retains all of the employees, even those the buyer does not wish to employ. In a share sale, the target company’s employees remain employed by the company, unless a change of ownership triggers rights under the employment agreements of certain employees such as senior executives. In an asset sale, non-union employees need not be taken on by the buyer, though commonly the seller will require the buyer to offer new contracts to all or most employees on terms that are substantially similar or identical to their existing contracts (including a recognition of prior service) so the vendor avoids wrongful dismissal claims from the employees.
However, by law, the buyer will become liable for environmental contamination and for union employees in an asset transaction. This means that (subject to any agreed price adjustments or indemnifications) the seller gets to walk away from any liabilities and the buyer takes them on.Īn asset sale allows the buyer to cherry pick which assets it will purchase and which liabilities it will assume.
With a share sale, all of the assets and liabilities of the target company remain with that company. Here are five of the key considerations why: 1. Determining the appropriate structure – whether the buyer is buying shares or assets – is critical to a successful transaction.Īs a rule of thumb, sellers prefer share sales and buyers prefer asset sales.
This is the second post in a series that discusses some of the key issues buyers and sellers will encounter during the M&A process, and some of the lessons we have learned along the way.īuying or selling a business is a significant undertaking, and one you want to get right, whether you are the buyer or the seller. They are buying because they are in need of a replacement device, and in some cases, a first time smartphone.Our Business Transactions team has worked on a wide range of M&A deals. 5G volumes continues to rise especially as price points of many 5G products go down, yet we continue to believe that consumers are not yet buying specifically for 5G. “The pandemic is far from over yet consumers around the world continue to show the need for mobile devices and their willingness to spend in these categories.
“The smartphone market has been fortunate enough to not experience as severe supply constraints as the automotive, PC and display industries," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers. Overall growth was experienced in every region except for China where the lack of flagship product launches, weaker than expected demand, and theįurther decline of the Huawei brand pulled the market down by -10% YoY. According to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, smartphone vendors shipped a total of 313.2 million devices during the quarter which further proves this market is headed back toward future growth. NEEDHAM, Mass., J– The rebound from 2020 continued for smartphones in the second quarter of 2021 (2Q21) as overall shipment volumes grew 13.2% slightly beating IDC’s forecast of 12.5% growth. Despite Supply Concerns and Vendor Shakeups the Global Smartphone Market Still Grew 13.2% in the Second Quarter, according to IDC