In deciding whether we have an asset or an equity purchase, we start with our EV equity bridge An equity purchase or a share purchase is just buying that equity box You find the shares from the current shareholders, rip up their shares and they're gone But what do you take on? You thus take on the full enterprise value, fantastic! And all of the obligations of the debt and debt equivalent After this, if you are the buyer? You've taken on the target and you consolidate the two Buyer plus target equals consolidated company, they're now two companies consolidated into one Now compare that with an asset purchase, only the assets or the enterprise value is bought Here you're not buying the shares, you're not buying the equity You're just cherry picking almost, the assets that you want So afterwards you'll just have buyer plus new assets equals buyer again. There's no consolidation of two different companies Important to realize here, it's called an asset purchase. But your enterprise value is actually your net operating assets So you'll be buying operating assets such as inventory But you'll also have to buy the suppliers as well, so you'll have to take on the accounts payable as well Now why might you just go for an asset purchase? Firstly, you don't have to consolidate two different companies But secondly, there may be certain items that you don't want to take on e.g the debt But maybe there's a big debt equivalent such as an underfunded pension liability or an environmental liability When making this kind of purchase, we need to make sure that your debtholders, debt equivalent holders and shareholders are happy about this What we'll hope, is that all of the cash raised from the asset sale will be enough to pay off the debt holders Be enough to plug any underfunded pension and then leave some for your equity holders