Business acquisitions - legal pitfalls and practical tips

Business acquisitions - legal pitfalls and practical tips
For many entrepreneurs, a company purchase is a unique event. As soon as professional parties act on the counter side, it is particularly important for entrepreneurs to identify typical fields of concern and pitfalls. Dr. Maja Baumann from SwissLegal (Zurich) AG explains the most important issues in the enclosed article (published in "Rechtsguide 2020" on 4 September 2020, supplement to the Tages-Anzeiger) and gives valuable tips which she, as a long-standing practitioner, would like to recommend to buying paties.

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"in a nutshell"

The right structure of the transaction is important for both sides. Several factors must be taken into account when deciding whether a share deal, i.e. the sale of shares, or an asset deal, i.e. the sale of a part of a business with assets, liabilities and contracts, should take place. For example, the tax consequences (above all tax-free capital gains of private sellers), the complexity of the transaction (often singular succession in the case of an asset deal), the fact that a part of the business remains with the seller, "inherited burdens" in the company, the necessary approvals of employees and contractual partners as well as VAT law issues (asset deal, reporting procedure etc.).

In addition to the exact definition of the object of purchase and the purchase price, the parties should pay particular attention to the clauses concerning representations, warranties and indemnifications. Here, various risks of a legal, fiscal and economic nature are assigned to a contracting party. Any phrase or wording, no matter how small, can be important and, if you feel uncomfortable, consider the contract unfair etc., it is advisable to wait - or not to buy at all.