In the field of small market M&A transactions, the choice between structuring a transaction as a transfer of assets or as a sale of shares remains one of the most sensitive and decisive points in the process. It is not just a matter of tax or the purchaser’s preference, but a decision that directly affects the allocation of risks, the executability of the transaction and, in many cases, the very viability of the closing.
Unlike in the medium or large market, where corporate structures tend to be more refined and standardisation favours share deals, it is more common in the small market to encounter more diverse situations: family-owned companies with decades of history, fragmented shareholding structures, little internal formalisation and a variable degree of exposure to legal or tax contingencies. In this context, replicating schemes without a detailed analysis often leads to unnecessary obstacles or oversized contractual solutions.
From the purchaser’s perspective, the direct transfer of the business through the sale of specific assets and liabilities is often presented as a formula that allows for greater control of the acquired entity. The possibility of selecting which elements are included in the transaction (such as assets, contractual obligations, employees, etc.) makes it possible to isolate legacy risks and limit exposure to contingencies that are not always easily insurable or quantifiable.
However, this apparent advantage must be qualified. In practice, the execution of an asset transfer requires much more intensive coordination than the sale of shares: the individual transfer of relevant agreements, analysis of hidden change of control clauses, transfer or renewal of administrative licences and, in the context of employment, the correct structuring of the succession of the business. All of this introduces friction that, in small transactions, can be disproportionate in terms of cost, time and commercial risk.
From the seller’s point of view, this structure is also often less tax-efficient, especially when the business is carried out through a company to whom value has accumulated over the years. This factor cannot be ignored in transactions where price is highly sensitive.
The acquisition of the company that operates the business, on the other hand, has a clear advantage in terms of structural simplicity. The business continues to operate in the same vehicle, contractual relationships are preserved and an orderly transition is facilitated, especially when the seller remains involved for a period after the closing.
The downside of this continuity is well known: the purchaser assumes the entire history of the company, including latent contingencies that are not necessarily proportionate to the size of the transaction. In this regard, the balance between sufficient analysis and the need not to paralyse the transaction is particularly delicate in the small market.
There is also an element that is decisive in practice and is rarely addressed explicitly: the composition of the shareholding in family businesses. It is not uncommon to find highly fragmented capital, with second or third generations, unsettled inheritances, usufructs, shares held by minors, or even latent conflicts between family branches.
In these scenarios, arranging a sale of shares requires the cooperation of all the selling shareholders, which introduces obvious risks of deadlock, delays or, quite simply, the unfeasibility of the transaction. In contrast, the transfer of the business through the sale of assets has a clear structural advantage: even in the case of essential assets, the transaction usually requires only a majority vote at a GSM, without the need for unanimity unless expressly provided for in the articles of association. From a strictly corporate perspective, this difference is fundamental and explains why, in certain family transactions, the sale of assets becomes the only realistic alternative.
In the field of small market M&A, the structure of the transaction should not be imposed by preconceived schemes, but rather by a combined analysis of the nature of the business, the legal status of the company, the profile of the seller and the actual capacity for execution. It does not serve to simply identify the hypothetically most optimal legal option; it is essential to assess whether that option is viable within a reasonable time frame and without eroding the value of the business during the process.
Practice shows that many transactions do not fit neatly into either of the two ‘pure’ models. In this context, it is common to resort to intermediate solutions that allow the advantages of both schemes to be captured. Examples include share purchase transactions preceded by corporate reorganisations that isolate non-operating assets or specific risks; asset transfers accompanied by continuity agreements and reinforced guarantees; or structures in which risk allocation is adjusted through economic mechanisms such as price retention, deferred payments or earn-outs.
These solutions are not the result of an exercise in legal creativity, but rather the need to adapt the legal structure to the reality of the business and the parties, avoiding both contractual overprotection and the ill-considered assumption of risks.
In the small market, structuring an M&A transaction correctly requires in-depth knowledge not only of legal techniques, but also of the business and personal context in which the transaction takes place. The dilemma between asset transfer and share purchase is not resolved with standard formulas, but with judgement, experience and a clear understanding of which risks are acceptable and which are not.
In the small market, the appropriate structure is one that allows the transaction to be executed smoothly, maintaining a reasonable balance between legal protection and practical viability.
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