When buying and selling a business, we generally encounter two ways of making such a transaction. The first method used is to sell the company in the form of a "share deal" and the second method is to buy an asset (Asset Deal). Both of these methods are used on an international scale and are also defined in Slovak legislation, namely in the provisions of the Commercial Code. The advantages and disadvantages of both methods will be explained below.
Purchase of business shares - Share Deal
(Acquisition of business shares in s.r.o. or shares in a.s. according to Section 115 and the following Commercial Code)
Under the Share Deal method, the purchase of a business is a transfer of a business share through a share transfer agreement. In this way the owner transfers to the acquirer his business share or, respectively, shares in the company. The new acquirer becomes the owner of the share (s) and further treats the company at its discretion as the owner (shareholder) of the company. In other words, the owner of all rights remains a company, only its owner changes. Purchase of business shares is generally simpler and less time-consuming than the purchase of a company (asset), since there is no change in the rightholder. On the other hand, under the Share Deal method, the buyer enters into the overall legal and liability status of the purchased company, so the transaction risk is higher than that of the Asset Deal. Thus, if the specific defects and liabilities of the company being sold are not dealt with in detail in the contract itself, then the seller transfers the shares as they are and the acquirer can not successfully claim a reduction in the price due to the defaults or liabilities of the company. In this case, it is therefore appropriate, in the form of a due diligence, to examine in detail its property and legal circumstances. At the same time, the results of due diligence are the basis for determining the purchase price and its clearing for those risks.
Purchase of a company (assets) - so-called Asset Deal
(Purchase of the company or its part pursuant to Section 476 and the Commercial Code)
This type of sales company is based on a sales contract. It is used in more complex cases and the substantial difference compared to the transfer of a business share is that the acquirer does not transfer the ownership of the share in the company being the subject of the sale but the company itself as the buyer acquires ownership rights to the tangible property, values that serve the business. The difference with regard to the purchase of the business shares and the disadvantage of the sales contract of the company from the point of view of the seller is that the seller is guilty of defects as well as the obligations of the selling company. It is therefore recommended in the contract to precisely determine which rights, obligations, and things are the subject of the firm transferred in order to avoid possible future disputes. Another difference compared to the Share Deal is that the reward for the sale of the company does not go to the hands of its owner (shareholder, shareholder) but directly to the company.
Administrative obligations.
Legal and administrative obligations are also associated with the sale of the company. As well as for the purchase of a company and for the purchase of business shares, it must be entered in the relevant Business Register in accordance with the Slovak legislation. Also, the purchase of a company as well as the purchase of business shares, especially in the case of larger companies, may result in a notification or approval obligation under the right to competition.
