Deal Structuring: Share Deal vs. Asset Deal

Deal Structuring: Share Deal vs. Asset Deal

One of the first strategic decisions is whether to structure the acquisition as a share deal (buying the shares of the French company) or an asset deal (purchasing the company’s assets, such as its real estate, directly). Each approach has distinct legal and fiscal consequences:

• Share Deal: The foreign investor buys shares of the French target company, which continues to own its real estate. Legally, this means the company’s identity doesn’t change – all its assets and liabilities remain with it, simply under new ownership. This route is often simpler in terms of continuity (contracts, permits, and employees remain with the same entity) and can be tax-efficient. For example, transfers of shares in French corporations like an SAS or SA are subject only to a 0.1% stamp duty​. Even in the case of a real estate-heavy company, share transfers typically incur at most a 5% transfer tax (applicable if the company’s assets are comprised of >50% French real estate)​. Crucially, a share deal does not trigger a change in property ownership in the land registry – the company still owns its real estate, avoiding direct real estate transfer taxes and notarial formalities on each property.
• Asset Deal: The foreign investor (or its French subsidiary) purchases the real estate assets (and possibly other business assets) directly, often by carving them out of the target company. Legally, this entails transferring title to each property, which in France requires notarized deeds and registration. Each real estate asset sale incurs transfer taxes of approximately 5–6% of the property value (exact rate varies by location)​, plus notary fees. An asset deal allows the buyer to cherry-pick assets and leave behind unwanted liabilities in the old company, but it is more complex if the target’s business is an ongoing concern – transferring contracts, permits, and employees may require additional steps. Notably, a business asset sale in France (vente de fonds de commerce) or a transfer of a full branch of activity will by law transfer employees to the buyer’s entity and usually requires specific formalities (e.g. public notices for a fonds de commerce sale).

Comparative Overview – Share vs. Asset Deal:

In practice, share deals are more common for acquiring a company with significant real estate, because they avoid double taxation and disruption. Sellers also prefer share deals since they “trigger fewer taxes and organize the transfer of the liabilities of the target company” to the buyer​ (any latent gain on the properties remains unrealized in the company’s books). Asset deals might be chosen in specific cases – for instance, if the buyer only wants the real estate itself or if certain liabilities in the company make a share purchase unattractive. Often, dealmakers will consider hybrid approaches as well, such as carving out the real estate into a separate entity prior to sale, or doing a share deal with a post-closing property sell-off (e.g. sale-and-leaseback) as part of the strategy.