Business Acquisition & Restructuring
A business acquisition (M&A) or restructuring is legally and economically more complex than a new formation, since existing contracts, liabilities, and employment relationships must be assumed or reorganized.
Asset Deal vs. Share Deal
There are two fundamental approaches to structuring a business acquisition:
- Share Deal: The company shares themselves are transferred; the legal entity continues unchanged — along with all existing contracts, liabilities, and risks.
- Asset Deal: Specific assets (equipment, customer contracts, employees) are selectively transferred, while the original legal entity, with its legacy liabilities, remains behind.
The choice has significant tax and liability consequences and should not be made without expert guidance.
Restructuring: out-of-court vs. insolvency proceedings
In financial distress, there are generally two paths:
- Out-of-court restructuring: Negotiating with creditors over deferrals, partial waivers, or debt rescheduling, without opening formal insolvency proceedings. Requires creditor consent.
- Insolvency proceedings with a restructuring goal: Under German insolvency law, protective shield proceedings and self-administration allow restructuring under court supervision while management largely retains control.
Common misconception: insolvency automatically means liquidation
A common misconception is that insolvency proceedings automatically lead to liquidation. In fact, restructuring within insolvency proceedings (e.g. via an insolvency plan) is an established and legally recognized goal — many well-known companies have been successfully continued this way.
Deadlines and management duties
Under German law, illiquidity or over-indebtedness triggers a duty to file for insolvency within tight statutory deadlines. Violating this duty can result in personal liability for management — a key reason to have financial warning signs reviewed by experts early.
Conclusion
Both business acquisitions and restructurings require careful legal and tax structuring. The choice between asset and share deals, or between out-of-court and formal insolvency-based restructuring, has far-reaching consequences and should be discussed early with specialized advisors.