Company acquisitions are back on the corporate agenda, but Tauranga-based commercial law specialist Kylie van Heerden says many business owners and potential purchasers are unaware of the risks when choosing between asset or share sales.
"The reality is, I think, a number of pros and cons are unknown to the average business owner/purchaser," said Ms van Heerden, who is a partner of Sharp Tudhope Lawyers. "These risks are often not considered and can have significant consequences if you choose the wrong sale structure for your particular objectives."
Recent Bay of Plenty activity has ranged from honey and health company Comvita's $12.3 million acquisition of Timaru's New Zealand Honey Ltd, to Graeme Hart's agreement to sell Carter Holt Harvey's pulp, paper and packaging businesses to Japanese interests for $1.03 billion.
An asset sale involved selling some or all of the assets owned by a company, such as plant and equipment, land and buildings, trading stock, as well as intangible assets such as intellectual property and goodwill.
In a share sale, the purchaser took control of an existing company by buying shares at a stipulated price, acquiring both the assets and liabilities.