Asset acquisition refers to the selective acquisition of all or part of the assets of the opposing company by means of payment of cash, in-kind, marketable securities, labor services, or debt relief.
When acquiring assets, special attention must be paid to the local laws and regulations of the country to be acquired, so as not to bear other additional debts or obligations after the acquisition.
Therefore, the acquisition is generally done indirectly as much as possible by a company established by the local laws of the country where the acquired company belongs, so that the responsibilities of the parent company and the subsidiary can be divided, and the parent company will be exempt from the country’s income tax declaration.
Conceptual features
1. The subject of the asset purchase agreement is the two companies as the buyer and seller, excluding the company’s shareholders. Therefore, there is an essential difference between the main body of asset acquisition, control acquisition and equity acquisition.
2. The subject of asset acquisition is the sale of a particular company’s assets, and does not include the company’s liabilities.
3. After the completion of the asset acquisition, the acquiring company and the target company each maintain their own independent legal personality.
4. Although the legal relationship of asset acquisition is relatively simple, corresponding transaction costs may also occur.
