Taking over an online business via asset or share transaction?

When buying or selling an online store, you have the option of choosing either an equity transaction (you are selling a business) or an asset transaction (you are selling a business activity). Both transactions can be executed in different ways, but at their core, these are the two methods of transfer at issue. It is good to familiarize yourself in advance with the pros and cons for each type of transaction. This aspect is often still part of the negotiations and has a serious tax aspect. 
 

On this page, we will explain to you what is meant by an asset transaction and by an equity transaction. Of both types of transactions, we will explain to you the advantages and disadvantages for both the buyer and seller of an online store.

Online business (sell) via an asset transaction

With an asset transaction (sometimes called an asset/liability transaction) (part of) the assets and (sometimes) the liabilities of a company are taken over. So Onlinebusiness B.V. sells the assets (and sometimes debts) of Onlinebusiness B.V. Items such as stock, online business (website), domain name and supplier contracts are taken over. Matters such as bank balances and debtors/creditors are usually not taken over but handled/held by the selling party itself. When taking over a sole proprietorship/VOF, there is always an asset transaction because there are no shares.

One of the tricky aspects of an asset transaction is that an acquisition agreement must define very clearly what exactly is being sold: All domain names, intellectual property, inventory (products + numbers), trade names, rights/obligations, agreements and not to forget: All accounts and logins (not only of the shop, hosting, domain name provider, but also of all sales channels such as Bol.com, Beslist.nl etc).

Another disadvantage of an asset transaction is that the buyer often has to renegotiate contracts with buyers and suppliers. And some of them will want to reconsider the terms of the agreement in a new situation (think of supplier discounts, payment terms, etc).

There are also advantages to this form of transaction for a buyer: First, it is possible to leave business in the selling B.V., which can reduce the risk of claims or unexpected negative surprises from the past. The second advantage is that the buyer can depreciate the purchased assets (goodwill) and thus realize a substantial tax benefit.

However, the seller will be taxed by the tax authorities on the sale price (read below why a share transaction is often more advantageous for a seller).

Buying or selling an online business via a share transaction

In a share transaction Onlinebus Holding B.V. sells the shares in Onlinebusiness B.V. The seller in this situation is not Onlinebusiness B.V., but Onlinebus Holding B.V. and what is sold are purely shares in Onlinebusiness B.V. 

The buyer takes over a B.V., including assets and liabilities, rights and obligations, agreements with suppliers and customers, licenses and permits and obligations to the tax authorities. Nothing really changes except the identity of the shareholder: That will now be the buyer.

For both buyer and seller, the share transaction is procedurally the simplest way of transfer: A joint visit to the Notary is in principle sufficient (but in all cases make sure that a good takeover contract is in place! See also our information on this subject) The buyer must bear in mind that he does not start with a "clean slate" but takes over not only all the rights but also the obligations and any so called "bodies in the closet". Proper due diligence is no luxury!

A seller will often prefer a share transaction, because he can get rid of his company in one go. Moreover, with a share transaction the seller can make use of the participation exemption, with which he is not taxed on the transaction price (!). Note: The seller must not be a private person, but for example a Holding B.V. ("1 B.V. is not a B.V." is the saying for a reason).

And here is a disadvantage for the buyer: In a share transaction, he cannot depreciate the acquired assets.

In addition, it is interesting to mention that it is sometimes possible to value tax losses in a B.V. to be acquired in the transaction price because the buyer can make use of so-called loss compensation. 

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Conclusion

In online business acquisitions, the asset transaction will occur more often than in the average SME business transfer, partly because the transaction amount is more often limited. However, be sure to document everything accurately and punctually in an acquisition contract and remember that the seller will be taxed on the transaction amount and the buyer can write off the assets acquired. Should a business be undertaken from a B.V. and a share transaction seem more advantageous, it does seem to be the appropriate mode of transfer (provided thorough due diligence has been performed).

Businessforsale.eu works with a network of professionals who can provide you with a solid valuation of your online business. Please contact us for more information.