Again, much will depend on the specific circumstances of the deal in question (such as the bargaining strength of the parties and what the seller is willing to sell) but, just as with a share sale, there are advantages and disadvantages to structuring the transaction as an asset sale both from the perspective of the buyer and the seller. As a general rule buyers prefer asset sales.
Advantages for the buyer
When the buyer purchases shares in a share sale it also indirectly acquires all of the assets and more importantly the liabilities of the company. The effect of a share sale is that the buyer takes the company as it is – the target company retains all of its existing assets and liabilities – which could be a concern for the buyer if they are aware of certain significant liabilities of the target company.
On an asset sale, however, the buyer can decide what assets (and/or liabilities) it would like to purchase and what assets (and/or liabilities) it would like to leave with the seller. This can lead to a certain amount of ‘cherry picking’ by the buyer. There may also be certain tax advantages for the buyer depending on the nature of the assets the buyer is acquiring.
Advantages/disadvantages for the seller
An asset sale can be of great benefit to a seller if the company has a loss making or non-core division that it would like to sell whilst retaining more profitable parts of the business or more generally if the seller only wants to sell part of its business. Conversely, the main disadvantage for a seller is that on an asset sale it will be unable to transfer assets and/or liabilities that it no longer wants to the buyer unless the buyer wishes to purchase them.