Asset purchase deals (fin. liiketoimintakauppa) are transactions where the seller transfers certain assets related to a business to the buyer, who then assumes the rights and obligations related to the assets. The pros of an asset deal for the buyer include the ability to select which assets and liabilities transfer, as well as the opportunity to depreciate the purchase price of certain assets included in the transaction. One advantage of an asset deal for the seller is that it allows the seller to cherry-pick, i.e., retain certain parts of the business.
Employees
It should be kept in mind that employees related to the transferred assets will transfer to the buyer as so-called ‘old employees’ in accordance with Chapter 1 Section 10 of the Employment Contracts Act (55/2001, as amended). The seller shall be liable for the salaries and other expenses related to the employees up to the transfer date, as of which, the buyer shall become solely responsible for any obligations towards the employees resulting from the employment contracts.
Object of transfer & consents from third parties
The parties should clearly define the object of the transfer well in advance of the transfer date or completion date of the transaction. What fixed assets will transfer, what intangible assets will transfer, do the assets include inventory or current assets, what contracts will transfer, and very importantly, does the contracts contain a change of control clauses. Ideally, the parties should try to obtain the required third-party consents for the transfer of contracts to the buyer before the completion of the transaction.
Taxation
In case the assets contain real estate, a transfer tax of three (3) per cent (%) shall be levied on the purchase price. In respect of VAT, most assets deal are exempt from paying value added tax as typically the buyer will continue the VAT deductible business going concern.
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