{"id":5913,"date":"2022-01-08T16:11:21","date_gmt":"2022-01-08T15:11:21","guid":{"rendered":"https:\/\/www.sv-merker.de\/die-bewertung-der-assets-beim-asset-deal\/"},"modified":"2022-09-23T17:47:25","modified_gmt":"2022-09-23T15:47:25","slug":"the-valuation-of-assets-in-asset-deals","status":"publish","type":"post","link":"https:\/\/www.sv-merker.de\/en\/the-valuation-of-assets-in-asset-deals\/","title":{"rendered":"The valuation of assets in asset deals"},"content":{"rendered":"<div id='full_slider_1'  class='avia-fullwidth-slider main_color avia-shadow  av-small-hide av-mini-hide  avia-builder-el-0  el_before_av_section  avia-builder-el-first   container_wrap fullsize' style=' '  ><div   data-size='featured_large'  data-lightbox_size='large'  data-animation='fade'  data-conditional_play=''  data-ids='5863'  data-video_counter='0'  data-autoplay='true'  data-bg_slider='false'  data-slide_height=''  data-handle='av_slideshow_full'  data-interval='5'  data-class=' image_no_stretch'  data-el_id=''  data-css_id=''  data-scroll_down=''  data-control_layout='av-control-default'  data-custom_markup=''  data-perma_caption='aviaTBperma_caption'  data-autoplay_stopper=''  data-image_attachment=''  data-min_height='0px'  data-src=''  data-position='top left'  data-repeat='no-repeat'  data-attach='scroll'  data-stretch='image_no_stretch'  data-default-height='42'  class='avia-slideshow avia-slideshow-1  av-control-default av-default-height-applied avia-slideshow-featured_large av_slideshow_full  image_no_stretch avia-fade-slider '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\" ><ul class='avia-slideshow-inner ' style='padding-bottom: 42%;' ><li  class=' av-single-slide slide-1 ' ><div data-rel='slideshow-1' class='avia-slide-wrap '   ><img src='https:\/\/www.sv-merker.de\/wp-content\/uploads\/Blogbilder-PM-Header-7-1500x630.png' width='1500' height='630' title='The valuation of assets in asset deals' alt='The valuation of assets in asset deals'  itemprop=\"thumbnailUrl\"   \/><\/div><\/li><\/ul><div class = \"caption_fullwidth av-slideshow-caption caption_left\"><div class = \"container caption_container\"><div class = \"slideshow_caption\"><div class = \"slideshow_inner_caption\"><div class = \"slideshow_align_caption\"><div class='avia-caption-content  '  itemprop=\"description\"  ><p>If you carry out an asset deal when buying a company, the valuation of the individual assets has tax consequences. Find out why this is so and what they are here.<\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div>\n<div id='av_section_1'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-1  el_after_av_slideshow_full  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div  style='height:40px' class='hr hr-invisible   avia-builder-el-2  el_before_av_four_fifth  avia-builder-el-first '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-3  el_after_av_hr  avia-builder-el-last  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><p><div  style='padding-bottom:0px; ' class='av-special-heading av-special-heading-h1  blockquote modern-quote  avia-builder-el-4  el_before_av_textblock  avia-builder-el-first  '><h1 class='av-special-heading-tag  av-mini-font-size-overwrite av-mini-font-size-24'  itemprop=\"headline\"  >The valuation of assets in asset deals<\/h1><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div><br \/>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><p><em>10th Januar 2022 by P. Merker<\/em><\/p>\n<h2><strong>What is it about?<\/strong><\/h2>\n<p><span style=\"color: #000000;\">If you want to buy or sell a business, you will have to ask yourself many questions that you did not know existed until now (unless you are a repeat offender). One of these questions might be: \u201cAsset deal or share deal?\u201d<\/span><\/p>\n<p><span style=\"color: #000000;\">In the following, we will focus in particular on the asset deal and which <span style=\"color: #90111c;\">tax consequences<\/span> are associated with an asset deal and the valuation of the assets.<\/span><\/p>\n<\/div><\/section><\/p><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='av_section_2'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-6  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-7  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 50px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:22px; '  itemprop=\"text\" ><h2>Table of contents<\/h2>\n<p><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#1\">1. What is an Asset Deal?\u00a0<\/a><\/span><\/p>\n<p><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#2\">2. What is a Share Deal?<\/a><\/span><\/p>\n<p><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#3\">3. Asset Deal or Share Deal &#8211; Wich is preferable?\u00a0<\/a><\/span><\/p>\n<p><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#4\">4. How is the purchase price allocated to the individual assets in an asset deal?<\/a><\/span><\/p>\n<p style=\"padding-left: 40px;\"><a href=\"#41\"><span style=\"color: #5f6062;\">Agreeing the purchase price allocation in the purchase contract<\/span><\/a><\/p>\n<p style=\"padding-left: 40px;\"><a href=\"#42\"><span style=\"color: #5f6062;\">Step-by-step Theory<\/span><\/a><\/p>\n<p style=\"padding-left: 40px;\"><a href=\"#43\"><span style=\"color: #5f6062;\">Equal distribution method or also \u201cWatering can method\u201d<\/span><\/a><\/p>\n<p><a href=\"#5\"><span style=\"color: #5f6062;\">5. How are the individual assets valued in an asset deal?<\/span><\/a><\/p>\n<p><a href=\"#6\"><span style=\"color: #5f6062;\">6. Conclusion<\/span><\/a><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='1'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-9  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-10  el_before_av_four_fifth  avia-builder-el-first  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><strong>1. What is an Asset Deal?<\/strong><\/h2>\n<p><span style=\"color: #000000;\">In an asset deal all the <span style=\"color: #90111c;\">assets of the company are sold individually<\/span> and transferred to the buyer on a specific date. The assets include real estate, machinery and equipment, office chairs and computers, inventories and goods, but of course also receivables, loans, patents, trademark rights etc. etc.\u00a0 Of course, not all assets have to be taken over.<\/span><\/p>\n<p><span style=\"color: #000000;\">The whole thing entails a <span style=\"color: #90111c;\">multitude of legal acts<\/span>: purchase agreements, assignment agreements, conveyances, endorsements etc. and is correspondingly complex.<\/span><\/p>\n<blockquote>\n<p><span style=\"color: #000000;\">In an asset deal, the company sells its assets. What remains is, as it were, an \u201cempty shell\u201d.<\/span><\/p>\n<\/blockquote>\n<\/div><\/section><\/div><div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-12  el_after_av_four_fifth  avia-builder-el-last  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><div  class='avia-image-container  av-styling-    avia-builder-el-13  avia-builder-el-no-sibling  avia-align-center '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\"  ><div class='avia-image-container-inner'><div class='avia-image-overlay-wrap'><img class='avia_image' src='https:\/\/www.sv-merker.de\/wp-content\/uploads\/Asset-Deal-en.png' alt='What is an asset deal?' title='What is an asset deal?' height=\"405\" width=\"720\"  itemprop=\"thumbnailUrl\"  \/><\/div><\/div><\/div><\/div><\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='2'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-14  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-15  el_before_av_four_fifth  avia-builder-el-first  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><strong>2. What is a Share Deal?<\/strong><\/h2>\n<p>In contrast, the share deal seems to be a very simple matter: In a share deal, <span style=\"color: #90111c;\">shares<\/span> in a company or cooperatives or partnerships are sold. The whole thing is therefore reduced to a <span style=\"color: #90111c;\">single legal act<\/span> (a legal purchase)<\/p>\n<blockquote>\n<p>The sellers are therefore the shareholders of the company.<\/p>\n<\/blockquote>\n<\/div><\/section><\/div><div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-17  el_after_av_four_fifth  avia-builder-el-last  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><div  class='avia-image-container  av-styling-    avia-builder-el-18  avia-builder-el-no-sibling  avia-align-center '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\"  ><div class='avia-image-container-inner'><div class='avia-image-overlay-wrap'><img class='avia_image' src='https:\/\/www.sv-merker.de\/wp-content\/uploads\/Share-Deal-en.png' alt='What is a share deal?' title='What is a share deal?' height=\"405\" width=\"720\"  itemprop=\"thumbnailUrl\"  \/><\/div><\/div><\/div><\/div><\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='3'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-19  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-20  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><strong>3. Asset Deal or Share Deal? Which is preferable?<\/strong><\/h2>\n<p><span style=\"color: #000000;\">Whether a company purchase should be carried out as an asset deal or a share deal always depends on the <span style=\"color: #90111c;\">individual case<\/span>. The decision criteria are manifold and concern <span style=\"color: #90111c;\">tax considerations, practical and legal considerations or liability issues<\/span>.<\/span><\/p>\n<p><span style=\"color: #000000;\">We give a few examples:<\/span><\/p>\n<h3><span style=\"color: #000000;\"><strong>Is it always possible to choose between an asset deal and a share deal?<\/strong><\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">If you are buying a <span style=\"color: #90111c;\">sole proprietorship<\/span>, for example, a share deal is out of the question because there are simply no &#8220;shares&#8221;. A sole proprietorship has no legal personality of its own and therefore no company shares.<\/span><\/li>\n<li><span style=\"color: #000000;\">If you buy shares in <span style=\"color: #90111c;\">partnerships<\/span>, the tax consequences are the same as in an asset deal, while under civil law the shares are transferred as in a share deal.<\/span><\/li>\n<li><span style=\"color: #000000;\">If, on the other hand, you are planning a <span style=\"color: #90111c;\">hostile takeover<\/span>, you will certainly not want to approach your &#8220;target&#8221; (i.e. your target company) about selling its assets. An asset deal is most likely not possible.<\/span><\/li>\n<li><span style=\"color: #000000;\">Even in the case of <span style=\"color: #90111c;\">insolvency<\/span>, a share deal may be possible but rarely makes sense. Rather, it is a matter of separating out the assets of value.<\/span><\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\"><strong>How high is the tax?<\/strong><\/span><\/h3>\n<p><span style=\"color: #000000;\">Asset deals and share deals have <span style=\"color: #90111c;\">very different tax consequences<\/span>. These depend not only on the structure chosen, but also on which side you are on (buyer or seller) and the very individual circumstances of the parties involved.<\/span><\/p>\n<blockquote>\n<p><span style=\"color: #000000;\">In terms of buyer-seller, it is usually a case of &#8220;one man&#8217;s joy is another man&#8217;s sorrow.&#8221;<\/span><\/p>\n<\/blockquote>\n<p><span style=\"color: #000000;\">Here are some aspects to consider:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">As a buyer in an asset deal, you can depreciate the depreciable fixed assets &#8211; i.e. the buildings, machinery, equipment, vehicles, but also intangible assets &#8211; based on the current market values (a so-called &#8220;<span style=\"color: #90111c;\">step-up<\/span>&#8220;). This possibility does not exist when acquiring a share in a company. We will return to this in detail<\/span><\/li>\n<li><span style=\"color: #000000;\">For the seller of a corporation who chooses the asset deal, the problem arises that the transfer of the purchase price from the &#8220;empty&#8221; shell of the company entails <span style=\"color: #90111c;\">higher tax payments<\/span> (trade tax, corporate income tax, final withholding tax) than if he were to sell, say, GmbH shares.<\/span><\/li>\n<li><span style=\"color: #000000;\">The situation is different, however, if <span style=\"color: #90111c;\">losses<\/span> are <span style=\"color: #90111c;\">carried forward<\/span>.<\/span><\/li>\n<li><span style=\"color: #000000;\">If real estate is included in the basket, the asset deal leads to <span style=\"color: #90111c;\">real estate transfer tax liability<\/span>, while the share deal opens up structuring possibilities.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">In fact, there are countless metres of literature on the subject and many outstanding experts invest a lot of work in optimising their clients&#8217; transactions accordingly. The best among them even think about structures that are advantageous for a later sale already when buying a company!<\/span><\/p>\n<h3><span style=\"color: #000000;\"><strong>Is it possible to ensure that all the assets that are to go with the asset deal really go with it?<\/strong><\/span><\/h3>\n<p><span style=\"color: #000000;\">The so-called <span style=\"color: #90111c;\">principle of certainty applies<\/span>: only those assets that are sufficiently specifically defined in the purchase agreement will be sold. If something has been &#8220;forgotten&#8221;, you have to renegotiate &#8211; and that can be expensive.<\/span><\/p>\n<p><span style=\"color: #000000;\"><span style=\"color: #90111c;\">Contracts with third<\/span> parties that are to be taken over are also a factor of uncertainty. For this to succeed, the third parties must agree.<\/span><\/p>\n<p><span style=\"color: #000000;\">An exception to this are <span style=\"color: #90111c;\">employment contracts<\/span>, which are &#8220;automatically&#8221; transferred under certain conditions. Here, too, it should be thoroughly checked in advance whether this is what is wanted.<\/span><\/p>\n<h3><span style=\"color: #000000;\"><strong>And how can we ensure that there is no rotten apple in the basket in the share deal?<\/strong><\/span><\/h3>\n<p><span style=\"color: #000000;\">For example, <span style=\"color: #90111c;\">unidentified liabilities and inherited burdens<\/span> can lead to liability risks for the buyer.<\/span><\/p>\n<p><span style=\"color: #000000;\">It also happens that contractual partners of the company for sale have reserved <span style=\"color: #90111c;\">extraordinary rights of termination<\/span> should the shareholder change. This may leave you without your most important business partner.<\/span><\/p>\n<p><span style=\"color: #000000;\">You may now have a small impression of how complex the decision for a transaction structure can be.<\/span><\/p>\n<p><span style=\"color: #000000;\">In the following, let us assume that you as a buyer have already gone through this process and that a decision has been made in favour of an asset deal.<\/span><\/p>\n<p><span style=\"color: #000000;\">We had identified the possibility of a step-up as an important motive for the asset deal.<\/span><\/p>\n<p><span style=\"color: #000000;\">To recap:<\/span><\/p>\n<blockquote>\n<p><span style=\"color: #000000;\">A step-up means that the acquired (depreciable) <span style=\"color: #90111c;\">assets are revalued<\/span> and depreciated on the basis of this revaluation. If the fair values are higher than the current book values, this results in additional depreciation potential. Additional depreciation potential also arises from the possibility to write off the <span style=\"color: #90111c;\">goodwill<\/span> remaining after the revaluation of the assets.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"color: #000000;\">These possibilities do not open up in the case of a share deal. Here, the old depreciation plans are simply continued within the acquired company.<\/span><\/p>\n<p><span style=\"color: #000000;\">The interesting question is how exactly the revaluation of the assets is carried out and how the purchase price is allocated to the individual assets. For here, too, there are further structuring possibilities that can lead to higher or lower tax payments.<\/span><\/p>\n<p><span style=\"color: #000000;\">Since this is the part we very often have to deal with in our valuation practice, let&#8217;s take a closer look.<\/span><\/p>\n<\/div><\/section><\/div>\n<\/p>\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='4'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-22  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-23  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><strong>4. How is the purchase price allocated to the individual assets in an asset deal?<\/strong><\/h2>\n<p><span style=\"color: #000000;\">A healthy company is usually more than the sum of its parts. This means that it must be clarified how the total sum &#8211; i.e. the purchase price &#8211; is to be divided among the individual parts &#8211; i.e. the assets.<\/span><\/p>\n<p><span style=\"color: #000000;\">The question is important because:<\/span><\/p>\n<p><span style=\"color: #000000;\">After all, you can not only depreciate the fair market values, which are higher than the book values, but also <span style=\"color: #90111c;\">intangible assets created by your predecessor<\/span> and &#8211; if available &#8211; <span style=\"color: #90111c;\">goodwill<\/span>. Your predecessor could not do either.<\/span><\/p>\n<p><span style=\"color: #000000;\">However, while goodwill is to be depreciated on a straight-line basis over 15 years, many machines and equipment, for example, have a much shorter useful life. <\/span><\/p>\n<blockquote>\n<p><span style=\"color: #000000;\">This means that the <span style=\"color: #90111c;\">distribution of the purchase price<\/span> among the various assets also determines the <span style=\"color: #90111c;\">depreciation potential<\/span>.<\/span><\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='41'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-25  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-26  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3><strong>Agreeing the purchase price allocation in the purchase contract<\/strong><\/h3>\n<p><span style=\"color: #000000;\">You can already specify a purchase price allocation in the purchase contract. The tax authorities are also bound by this. Unless there is a <span style=\"color: #90111c;\">fictitious transaction<\/span> or an <span style=\"color: #90111c;\">abuse of the tax system<\/span>, or the apportionment made is <span style=\"color: #90111c;\">economically unreasonable<\/span>.<\/span><\/p>\n<p><span style=\"color: #000000;\">In fact, we are often called in because there is a disagreement between the tax authorities and the entrepreneur regarding the valuation of plant and machinery. Our experience is: entrepreneurs usually have very good reasons for a certain assessment, which cannot be recognised in a pure desk valuation. <\/span><\/p>\n<blockquote>\n<p><span style=\"color: #000000;\">Tax officials are not valuation experts! <\/span><\/p>\n<\/blockquote>\n<p><span style=\"color: #000000;\">With a well-documented, court-proof valuation by an expert, a lot of disputes can be avoided.<\/span><\/p>\n<p><span style=\"color: #000000;\">Unless an apportionment has been made or the one made is not accepted, the so-called step-by-step theory is applied:<\/span><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='42'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-28  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-29  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3><strong>Step-by-step Theory<\/strong><\/h3>\n<p><span style=\"color: #000000;\">1. First, the assets that the seller has already recognised in the balance sheet are increased to the respective <span style=\"color: #90111c;\">partial value<\/span>.<\/span><\/p>\n<p style=\"padding-left: 40px;\"><em><span style=\"color: #000000;\">The concept of partial value originates from the Valuation Act, which regulates the valuation of assets for tax purposes in Germany. It is used for the valuation of business assets for tax purposes. The going-concern value is defined as the amount that an acquirer of an entire business would recognise for a single asset, assuming that the business will continue. As a rule, the partial value corresponds to the market value or fair value.\u00a0 (<a href=\"https:\/\/www.gesetze-im-internet.de\/bewg\/__10.html\" target=\"_blank\" rel=\"noopener\">\u00a710 BewG<\/a>)<\/span><\/em><\/p>\n<p><span style=\"color: #000000;\"><em>\u00a0<\/em><\/span><span style=\"color: #000000;\">2. Then, the previously unrecognised, intangible, internally generated assets are recognised as acquired intangible assets at the going-concern value. Example: Internally generated software<\/span><\/p>\n<p><span style=\"color: #000000;\">3. The remainder of the purchase price is capitalised as goodwill.<\/span><\/p>\n<p><span style=\"color: #000000;\">In exceptional cases, there is even the possibility to deduct this residual value immediately. For example, if the surcharge was paid to get rid of an unwelcome shareholder. However, the emphasis is on &#8220;exception&#8221;.<\/span><\/p>\n<p><span style=\"color: #000000;\">The term &#8220;<span style=\"color: #90111c;\">modified step theory<\/span>&#8221; is understood to mean an approach that virtually combines steps 1 and 2.<\/span><\/p>\n<h3><\/h3>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='43'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-31  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-32  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3><strong>Equal distribution method or also \u201cWatering can method\u201d<\/strong><\/h3>\n<p><span style=\"color: #000000;\">This is a method in which the partial values of all assets as well as the partial value of the goodwill are first determined. Then the total purchase price is distributed among the assets in proportion to the determined partial values.<\/span><\/p>\n<p><span style=\"color: #000000;\">Which method to use is probably debatable and definitely a task for your tax advisors.<\/span><\/p>\n<p><span style=\"color: #000000;\">Finally, let&#8217;s get practical again and look at how we arrive at the individual partial values.<\/span><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='5'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-34  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-35  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><strong>5. How are the individual assets valued in an asset deal?<\/strong><\/h2>\n<p><span style=\"color: #000000;\">For <span style=\"color: #90111c;\">tangible assets<\/span> such as <span style=\"color: #90111c;\">land, machinery and production facilities<\/span>, it is recommended that the value be determined by a (court-proof) <span style=\"color: #90111c;\">expert opinion<\/span>.<\/span><\/p>\n<blockquote>\n<p><span style=\"color: #000000;\">If you would like to know how we value machinery and equipment in practice, read our article &#8220;<span style=\"text-decoration: underline;\"><a style=\"color: #000000; text-decoration: underline;\" href=\"https:\/\/www.sv-merker.de\/en\/how-do-you-evaluate-machines\/\">How do you actually value machinery?<\/a>&#8220;<\/span><\/span><\/p>\n<\/blockquote>\n<p><span style=\"color: #000000;\">In the case of <span style=\"color: #90111c;\">real estate<\/span>, the <span style=\"color: #90111c;\">division<\/span> between land on the one hand and buildings on the other is of particular importance, because of course you can only depreciate the building. In any case, you are on the safe argumentative side with an <a href=\"https:\/\/wagnerundpartner.de\/bewertung-von-gewerbeimmobilien\/\" target=\"_blank\" rel=\"noopener\"><u>expert for commercial and industrial real estate<\/u>.<\/a><\/span><\/p>\n<p><span style=\"color: #000000;\">For <span style=\"color: #90111c;\">current assets<\/span>, you usually use the recoverable purchase price less costs, such as distribution costs.<\/span><\/p>\n<p><span style=\"color: #000000;\"><span style=\"color: #90111c;\">Goodwill<\/span> includes the customer base, distribution channels, reputation, good business relationships, brand and company awareness, quality of management and employees, internal organisation and order backlog. Goodwill is seen as a uniform asset that cannot be broken down into individual parts &#8211; in contrast to other intangible assets such as recipes, patents or trademark rights, which can be valued individually.<\/span><\/p>\n<p><span style=\"color: #000000;\">In principle, the <span style=\"color: #90111c;\">location<\/span> belongs to the property value or the value of the tenancy right and not to the goodwill.<\/span><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='6'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-37  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-38  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:0px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><strong>Conclusion<\/strong><\/h2>\n<p><span style=\"color: #000000;\">It is worth considering the optimal structure for a corporate transaction in advance. The decision whether to do an asset deal or a share deal is complex and can only be made on a case-by-case basis. The financial consequences of the chosen structure can be significant for both buyer and seller. The valuation of the individual assets also influences the tax consequences.<\/span><\/p>\n<p><span style=\"color: #000000;\">So much for today,<\/span><\/p>\n<p><span style=\"color: #000000;\">Your Philip Merker<\/span><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='6'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-40  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div  style='height:100px' class='hr hr-invisible   avia-builder-el-41  el_before_av_one_fourth  avia-builder-el-first '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class=\"flex_column av_one_fourth  flex_column_div av-zero-column-padding first  avia-builder-el-42  el_after_av_hr  el_before_av_three_fifth  \" style='border-radius:0px; '><div  class='avia-image-container  av-styling-circle    avia-builder-el-43  avia-builder-el-no-sibling  avia-align-center '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\"  ><div class='avia-image-container-inner'><div class='avia-image-overlay-wrap'><img class='avia_image' src='https:\/\/www.sv-merker.de\/wp-content\/uploads\/Ohne-Titel-1000-x-1500-px-2-300x300.png' alt='Philip Merker Expert for the appraisal of machinery and technical equipment' title='Philip Merker  Expert for the appraisal of machinery and technical equipment' height=\"300\" width=\"300\"  itemprop=\"thumbnailUrl\"  \/><\/div><\/div><\/div><\/div><div class=\"flex_column av_three_fifth  flex_column_div av-zero-column-padding   avia-builder-el-44  el_after_av_one_fourth  el_before_av_hr  \" style='border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p>Philip Merker, MBA<\/p>\n<div>\n<div>\n<div>\n<h2><a href=\"https:\/\/www.sv-merker.de\/en\/\">Merker Industriebewertungen<\/a><\/h2>\n<\/div>\n<section>\n<div>\n<p>Certified expert for the evaluation of machinery and technical equipment (DIN EN ISO \/ IEC 17024)<\/p>\n<p>Colonnaden 46, 20354 Hamburg<\/p>\n<p>Telephon +49 40 602 13 33<br \/>\n<a href=\"https:\/\/www.sv-merker.de\/en\/contact\/#contactform\">Email \u00adinfo@sv-merker.de<\/a><\/p>\n<\/div>\n<\/section>\n<\/div>\n<\/div>\n<\/div><\/section><\/div><div  style='height:100px' class='hr hr-invisible   avia-builder-el-46  el_after_av_three_fifth  avia-builder-el-last '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='av_section_13'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-47  el_after_av_section  avia-builder-el-last   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-5913'><div class='entry-content-wrapper clearfix'>\n<div  style='height:30px' class='hr hr-invisible   avia-builder-el-48  el_before_av_one_full  avia-builder-el-first '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class=\"flex_column av_one_full  flex_column_div av-zero-column-padding first  avia-builder-el-49  el_after_av_hr  el_before_av_hr  \" style='border-radius:0px; '><\/div><div  style='height:10px' class='hr hr-invisible   avia-builder-el-51  el_after_av_one_full  avia-builder-el-last '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":5,"featured_media":5798,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[130],"tags":[],"class_list":["post-5913","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ma-en"],"_links":{"self":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts\/5913","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/comments?post=5913"}],"version-history":[{"count":2,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts\/5913\/revisions"}],"predecessor-version":[{"id":6406,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts\/5913\/revisions\/6406"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/media\/5798"}],"wp:attachment":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/media?parent=5913"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/categories?post=5913"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/tags?post=5913"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}