![]() Consequently, the buyer accepts the assets onto its tax balance sheet also at their stepped-up values. Under an ‘asset deal’ disposal, the seller is required to transfer the title of its individual net assets at their fair market values, potentially suffering capital gains tax in the process. However, this negates the major benefit of the ‘asset deal’ structure for the buyer. Of course, it is entirely possible that a division’s net assets could be allocated to a new corporate wrapper prior to the sale, thus structuring the sale as ‘stock deal’. ![]() However, it may be necessary to structure the deal in this way where the target is a division rather than a subsidiary since in the case of a division the net assets are not held within a separate legal entity. ![]() It is probably evident that the process of individual valuation and title transfer has the potential for being both extremely complex and expensive to execute. Under this arrangement, the purchase agreement must deal separately with each of the assets and liabilities subject to acquisition. The acquisition of individual assets and liabilities is commonly referred to as an ‘asset deal’.
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