Share deal vs Asset deal in the eyes of an Amazon aggregator

Introduction

Mergers and acquisitions (M&A) are complex processes that require thorough planning and execution to ensure a successful outcome. Two common types of M&A transactions are share deals and asset deals. These transactions differ in their legal structure and the way assets are transferred. In this article, we will explain the differences between share deals and asset deals and why aggregators of Amazon brands prefer asset deals.

Share Deals

In a share deal, the buyer purchases the shares of the company that owns the assets rather than purchasing the assets themselves. The legal ownership of the assets remains with the company, but the buyer gains control over the assets by owning the majority of shares in the company. The company’s legal structure, tax status, and financial infrastructure remain unchanged, and the buyer takes over the management and control of the company’s operations.

One of the main advantages of a share deal is that it allows the buyer to acquire the company’s assets without the need for additional legal transfers, registrations, or authorizations. This can save time and money in the acquisition process. However, share deals also carry risks, such as potential liabilities associated with the company’s past activities, unknown liabilities, or potential legal disputes.

Asset Deals

In an asset deal, the buyer purchases the assets of the company rather than the shares of the company. This includes tangible assets such as inventory, equipment, and real estate, as well as intangible assets such as intellectual property, customer lists, and goodwill. The legal ownership of the assets is transferred to the buyer, and the seller retains the legal entity that owned the assets.

Asset deals are often preferred over share deals because they allow the buyer to acquire specific assets while avoiding potential liabilities associated with the company’s past activities. Additionally, asset deals provide the buyer with more flexibility to structure the transaction in a way that optimizes tax and financial benefits.

Why Amazon Brand Aggregators Prefer Asset Deals

Amazon brand aggregators are companies that acquire and manage multiple Amazon brands under a single umbrella. These brands often leverage the same legal, tax, financial, and sales infrastructure to support sales across multiple locations and channels. For example, an aggregator may use the same warehouses, distribution channels, and advertising strategies to sell multiple brands.

Asset deals are often preferred by Amazon brand aggregators because they allow the aggregator to acquire specific assets such as intellectual property, product designs, and customer data while avoiding potential liabilities associated with the seller’s past activities. Additionally, asset deals allow the aggregator to structure the transaction in a way that optimizes tax and financial benefits.

By acquiring multiple brands through asset deals, Amazon brand aggregators can build a portfolio of brands that complement each other and leverage the same infrastructure to drive sales and profits. This approach can be more efficient and cost-effective than acquiring individual brands through share deals or other M&A transactions.

Conclusion

Share deals and asset deals are two common types of M&A transactions that differ in their legal structure and the way assets are transferred. Share deals involve the purchase of shares in a company, while asset deals involve the purchase of specific assets. Amazon brand aggregators prefer asset deals because they allow the aggregator to acquire specific assets while avoiding potential liabilities associated with the seller’s past activities. Additionally, asset deals allow the aggregator to structure the transaction in a way that optimizes tax and financial benefits. This approach can be more efficient and cost-effective than acquiring individual brands through share deals or other M&A transactions.