APA – Asset Purchase Agreement

An Asset Purchase Agreement (APA) is the legal document governing the acquisition of specific assets from a company — as opposed to a Share Purchase Agreement (SPA), which transfers the shares of the target company. In an APA, the buyer selects which assets (intellectual property, customer contracts, equipment, trade name, stock) and which liabilities it assumes, without inheriting the target company's historical liabilities, pending litigation, or tax contingencies not expressly included in scope. This "clean acquisition" is the APA's primary structural advantage over an SPA.

The trade-off is complexity: unlike a share transfer (which transfers the entire legal entity with a single document), an APA requires individual transfer of each asset — contract assignments require counterparty consent, employment transfers trigger specific labor law protections (Article L. 1224-1 of the French Labor Code in France, Article 333 CO in Switzerland), and VAT/GST may apply to certain asset transfers. In distressed M&A — judicial reorganization (redressement judiciaire), sursis concordataire — the APA structure is typically preferred: the buyer acquires the operating assets (going concern) without the proceeding's debts, allowing rapid restart.

For tax purposes, an APA generates a capital gain at the company level (not the shareholder level), which is taxed at the IS rate in France or cantonal corporate rate in Switzerland. The buyer may benefit from a step-up in tax basis on the acquired assets, allowing higher future depreciation deductions — a structural benefit absent in an SPA (where the target's historical tax basis is preserved).

At Hectelion, we advise on the choice between APA and SPA and structure asset acquisition transactions in our M&A advisory mandates.