Share deal and asset deal

The core difference

A share deal transfers the shell. The company stays the same, and with it permits, the grid connection, land contracts, registrations and the commissioning date all remain untouched. What changes is who owns the company.

An asset deal transfers items and contracts one by one. Each has to be identified and conveyed, and every counterparty whose contract is meant to travel has to agree: the grid operator, the landowner, the contractor for its warranty, the offtaker under a power purchase agreement.

Why share deals dominate for operating assets

They preserve the remuneration. The entitlement attaches to the installation and to its commissioning date, and both stay inside the company. They also preserve the grid connection and the land contracts, each of which would have to be renegotiated in an asset deal, with every deadline that follows from doing so.

The price is the past. Buying a company means buying its history: tax assessments, old contracts, liabilities, disputes. Review is therefore broader in a share deal, which is why the purchase agreements carry warranties and indemnities for matters arising before completion.

When an asset deal is the better route

For a project with no history, a newly incorporated company for instance, the share deal loses its advantage because there is no past to preserve. The same holds where only part of a portfolio is to move, or where the company carries legacy items the buyer does not want.

Tax weighs on both sides and is the item most rarely settled in passing: the treatment of the purchase price, the buyer's depreciation base, VAT, and for land the real estate transfer tax all differ fundamentally.

In practice the form is rarely chosen freely; it follows from what the project already is. A ready-to-build project almost always sits in its own company, and the share deal is then the route with the fewest consents left open.

For preparation that means building a clean company early: one purpose, no unrelated contracts, no legacy liabilities, complete records. A company holding other things alongside the project is either unpicked before the sale or discounted in the price, and both cost more than separating would have.

What actually decides the negotiation is not the labels but three mechanisms: which warranties the seller gives, how long they run, and what share of the price is held back or placed in escrow until they expire. Those three move more money than the choice of transaction form. This is orientation and not legal or tax advice.