The sale and purchase of a Swiss business can take a number of different forms but there are basically three mechanisms for taking control of a business in Switzerland: by the acquisition of shares, by the acquisition of assets or by a merger.

The most common form of acquisition is the purchase of shares. The sale of assets is mainly used in acquisitions pertaining to a business unit or divisions not organized in one or more separate legal entity(ies). Asset deals are also more frequent when it comes to the acquisition of real estate. Mergers are more frequently used for internal reorganization purposes, including in connection with post-acquisition integration, but can in certain circumstances also be used in acquisitions.

Auction processes are becoming more and more frequent in Switzerland. Such processes are typically administered by investment banks or other financial/M&A advisers, who put together the teaser, information memorandum and virtual data room, and organize procedural matters by way of process letters. In the course of the auction process, the bidders are initially requested to submit non-binding indicative bid letters and, at a later stage, so-called binding bid letters as well as a mark-up of the seller's draft SPA. Although referred to as "binding bid letters," these letters are very rarely legally binding under Swiss law. An auction process is usually used as a tool to put time pressure on the buyer to wrap up its due diligence in a very short period of time and to enable the seller and its advisers to compare the offers, not only in terms of pricing, but also in terms of warranties and covenants required by potential buyers.

The Merger Act contains specific rules on mergers. A merger is defined as the combining of all assets, liabilities and contractual obligations of two or more companies. There are two types of mergers in accordance with the Merger Act: (i) the absorption merger, where one company absorbs another — the transferring company being liquidated, and its assets and liabilities transferred to the absorbing company; and (ii) the combination merger, where all companies merge into a new company — all merging companies are liquidated and their assets and liabilities are transferred to a new company. The shareholders or quotaholders or other members in the transferring company generally become members in the absorbing company and the transferring company is dissolved.

The main forms of corporate entity in Switzerland are:

• share corporations (Aktiengesellschaft/AG; société anonyme/SA; 'corporations'); and
• limited liability companies (Gesellschaft mit beschränkter Haftung/GmbH; société à responsabilité limitée/Sàrl, 'LLCs').

The two types of limited liability companies available under Swiss law are the share corporation (AG/SA) and the limited liability company (GmbH/Sàrl). Both company forms are quite similar. The minimum share capital required in the case of a share corporation is CHF 100,000 (of which, however, only CHF 50,000 must mandatorily be paid-in) and in the case of a limited liability company CHF 20,000 (which needs to be fully paid in). The shareholders of a limited liability company must be registered in the commercial register and thus become public, whereas the shareholders of a share corporation do not need to be disclosed in the commercial register. In general, the share corporation offers more flexibility to the shareholders than a limited liability company. For example, the minimum par value of a share in the case of a limited liability company must be at least CHF 100, while the minimum par value can be CHF 0.01 in the case of a share corporation. For this reason, the share corporation is typically used if certain flexibility is required with regard to the split of the share capital, such as in private equity set-ups. The limited liability in turn is often used by US groups as it allows a "check-the-box" election for US tax purposes, which is not possible with a share corporation.

No, in Swiss limited liability companies (GmbH) and share corporations (AG), the number of shareholders can be one or several.

An acquisition of shares (or share sale) is, from a transactional point of view, much simpler than an acquisition of assets, because: (i) no individual transfers of title to the various assets of the target company are necessary and all the liabilities of the company are transferred with the target company without having to observe any special transfer formalities or to obtain any consent or release from creditors; or (ii) no special formalities or registrations are required (as in case of a transfer of assets and liabilities under the Merger Act).

Since the entry into force of the Merger Act on 1 July 2004, it has been possible to conduct sales and acquisitions of assets as:

• transfers of assets and liabilities under the Merger Act; or
• transfers of defined assets and liabilities under the Swiss Civil Code and the Swiss Code of Obligations (CO) (a single transfer).

The advantage of the new regime under the Merger Act is that one single deed of transfer is sufficient for the assets and liabilities to be transferred by operation of law (as opposed to an acquisition of assets structured as a transfer of defined assets and liabilities in which the transfer of each and every asset and liability must be made in the form provided for in the Swiss Civil Code and the CO). The advantage of single transfers is that the buyer acquires only the liabilities listed in the agreement and transferred in that transaction. In addition, the terms of a single transfer of assets and liabilities can be kept confidential, while the documents governing a transfer of assets and liabilities under the Merger Act need to be filed with the commercial register, to which third parties may obtain access.