How can I sell my business?
In recent years the market for purchase and sale of companies. Traditionally, this market, from which large investment banks feed, was relegated exclusively to large companies that carried out relevant commercial operations.
The sale of SMEs has been relegated to opportunities that arose between acquaintances. We all know of cases of precipitated cessation of activity due to personal reasons of the owner, such as retirement, without his separation from the business resulting in an economic income by way of sale. The transfer of the business to the employees has also been frequent, allowing them to continue with the exploitation without the owner receiving a remuneration in exchange for the transfer of his social shares.
From our law firm we facilitate the sale or purchase of small and medium-sized companies that, due to their size, have limited access to the existing market for large corporations. In all cases of sale we link our fees for processing the process to the success of the process and the price actually obtained by the seller.
How can I list my business?
From the moment we receive a sales mandate from a client who wants to sell their business until the closing of the operation is achieved, different actions are carried out following the phases that we expose below. continued:
Previous study of the company
Before accepting a sales mandate, we always carry out a prior study of the real situation of the company. This is a job we do at no cost to the client. In this study we value the most relevant parameters that allow us to make an indicative estimate of the sale price.
Once our team has understood the economic and financial situation of the company, as well as the potential for future income, we communicate our first impression to the client and a first price estimate market.
If, once the aforementioned study has been carried out, we understand that the sale of the company is viable, we will convey to the client our willingness to accept the sale mandate.
We will accompany the client hand in hand throughout the process. For this reason, and to the extent that we link our fees to the success of the operation, it will also be necessary for us to have agreed with the seller an indicative sale price.
Prospecting potential buyers
Once the sales mandate has been accepted and work criteria agreed with the client, our first objective lies in the selection of potential interested parties for the purchase of the business. To carry out the search for buyers, we follow different criteria taking into account the particularities of the company in question: such as its branch of activity, size, economic results, location, etc.
In the first survey, only summarized information about the company is provided, reflecting the main indicators of the activity and its results.
An essential issue that should not go unnoticed is the necessary confidentiality of the company being sold. It is always advisable not to reveal your identity in this first phase to avoid mistrust on the part of clients, suppliers, creditors, employees, etc.
Introducing the company to interested buyers
Once the pre-selection of potential buyers is completed, ideally we will have obtained a positive response from 2 or 3 possible interested parties.
In this second stage, extended information and documentation is delivered. For this we prepare a dossier that we will have carefully prepared together with the client.
In some cases, especially when we deal with investment funds, the interested parties submit a “non-binding offer” where they provide a first assessment of the price they could pay for the shares or shares of the company.
Those who remain interested after analyzing the aforementioned dossier will be invited to participate in the sales process.
Once the sales process has begun, access to the detailed study of the fundamental documentation of the company must be provided to all those who are going to be part of it.
This documentary study process is called “due diligence”, and will foreseeably be required by buyers. It consists of an exhaustive analysis of the company, including contracts, employee payroll, tax and accounting documentation, etc.
It is advisable to provide a confidentiality agreement to be signed between the parties that in any case we prepare in this office to protect the disclosure of know how and other information sensitive.
It is common for the due diligence for the buyer to locate tax, labor or any other contingencies. It is also common for these issues to be used to negotiate the sale price downward, condition the payment terms and other contractual conditions of the operation. In all these cases we will advise the client as appropriate and we will defend his interests to avoid abuses by the buyer. P>
Negotiation of the final price and request of binding offers
When there is a greater number of interested parties, the possibilities of raising the final sale price increase, as a result of competition between the different interested agents.
In the price negotiation, the means or terms of payment are also considered, as well as the relationship of the current directors of the company during the years after the sale. We know that if not facilitated, by the seller, a stay after the sale can considerably reduce the offer of the buyer.
Negotiation of legal conditions and closing of the operation
Finally, once an agreement has been reached between the parties for the transfer of shares or shares of a company, we must include it in writing in a sales contract. This contract is often called “SPA” because it stands for the Anglo-Saxon concept “Shares Purchase Agreement” which means a contract for the sale of shares/participations.
The signing of the private purchase contract precedes the public elevation of the agreement and subsequent approval of commercial charges.
The study and supervision of the sales contract by a law firm is essential to avoid subsequent liabilities or defaults.
How long does a sales process usually take?
This question is frequently asked by our clients who decide to sell their business. Although it always depends on several factors, not always predictable at the beginning, we can estimate that a sales process can last between 6 and 12 months.
The duration could be considerably reduced when an agent interested in the purchase requests to participate in the sales process exclusively (“fast track”). In these cases it is always advisable for the seller to require a deadline for the issuance of a binding offer. If said term has expired, the interested agent has not offered a figure that meets the seller’s expectations, the sales process described above must be continued.
- The sale of a company is a process that usually lasts between 6 and 12 months.
- Our team carries out a prior assessment of your company, and an estimate of the real possibilities of sale. We accompany the client throughout the sales process, advising him on economic and contractual negotiations.
- We look for and locate the buyer, linking our fees to the success of the operation and the effective price obtained by the seller.
- Achieving a better sale price will depend on different factors, such as: number of interested parties that compete for the purchase of the company; tax, labor or any other type of contingencies; willingness of the seller to remain associated with the company in the years after the sale; etc.
- We carry out a more detailed study of the issues that affect the contractual, and more purely legal, scope of these business purchase and sale operations in our article What services does a law firm offer in a business sale-purchase process? a>