Glossary
Asset deal
An asset deal is the direct sale of the hotel’s assets: the property, or murs, the business, or fonds de commerce, or both. The buyer acquires assets, not a company. The selling company remains in existence, receives the price and keeps its liabilities.
In a transaction
The buyer chooses a precise scope and does not, in principle, take on the company’s history. Some obligations nevertheless follow the assets by law, first among them employment contracts (Article L.1224-1 of the French Labour Code). The assets are recorded at their acquisition cost, giving the buyer a new depreciable base.
In return, contracts do not transfer automatically. The lease is assigned in accordance with its terms, including any landlord consent. Franchise and management agreements require the consent of the franchisor or operator, and licences and permits are transferred or applied for again. The formalities are heavier: a notarial deed for the building, publication of the sale of the business, and a period during which creditors may object.
For the seller, the price is received by the company and may then be distributed: the tax effect is measured at both levels. Transfer duties, payable on the price of the property and of the business under separate regimes, should be confirmed with the notaire at the date of the transaction.
Not to be confused with
| Asset deal | Share deal | |
|---|---|---|
| Subject | Property and / or business | Shares in the company |
| Company liabilities | Stay with the seller | Taken over, covered by warranties |
| Contracts | Transferred one by one | Maintained, subject to change of control clauses |
| Tax base of the assets | Stepped up to the price paid | Historical base retained |
See also share deal.
To choose between property, business and shares: selling a hotel.
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