Business Buying and Selling
The buying and selling of companies is one of the most decisive operations in the business world. Knowing what transferring a business entails and its process is essential to ensure that each step is legally supported.
If you have found an opportunity to buy a company or if you simply want to sell your business, we clarify in this article what information to know, which documents are essential, and what guarantees should be established.
How does the buying and selling of companies work?
We could evaluate the business sale procedure based on the following steps:
- The economic valuation of the company and negotiations
- The drafting of a Letter of Intent
- Offer, Purchase Conditions and Guarantees
- Business sale contract
The economic valuation and negotiations
A professional valuation will be important. For example, buying companies in operation that are generating profits will be more objective than buying one that has sentimental value or when it is a research project. If you want to sell a business, setting a price range within the market will offer you bids aligned with the value of the company.
It will be important, at the start of the business negotiation, to establish a Confidentiality Agreement (also known as an NDA, non-disclosure agreement).
What is the Letter of Intent and what functions does it have?
The letter of intent is a document that reflects the preliminary agreements of the business sale transaction. It is also known by the acronyms LOI (letter of intent) or MoU (memorandum of understanding).
In the letter of intent, the interest in negotiations is expressed, agreements and the foundations of the future transaction are anticipated, or guarantees are reinforced if negotiations break down.
What happens in a simultaneous negotiation with several interested parties in the purchase and sale of a company?
Anyone wishing to buy a company usually dedicates internal resources, time, and hires advisors to carry out this procedure. Therefore, it is common to prepare the Due Diligence, a document similar to an audit where the company's economic and financial documentation is validated in order to act exclusively in that business purchase and avoid problems that could abort the operation.
If the Due Diligence detects insurmountable contingencies, such as significant unaccounted transactions or contracts and licences that are not in the name of the brand, it may mean the end of the operation or a reduction in the amount of the business purchase agreement.
Offer, Purchase Conditions and Guarantees
The seller, once they have obtained an offer that may be attractive for their business and the information on how the transaction will be carried out (purchase of shares in public limited companies, stakes in limited companies or sale of assets), the payment, the guarantees or the continuity of the workforce, must sign the business sale contract.
How can a business sale be paid for?
There are different payment methods for a business sale. These can be:
- Fixed payment in cash.
- Fixed payment in cash + deferred variable part.
- Guarantees: bank, personal.
Notary for Business Sale Agreement
Buying a company or selling a company concludes with the deed of sale of the company before a Notary. To prepare this deed, the following documents are required:
- NIF or NIE for identification of directors, participants or attorneys and possible powers of representation
- Deed of incorporation of the company and company bylaws
- Deed of sale of shares and participations
- Certificate of beneficial ownership
- Annual accounts, Balance Sheet and Detailed Inventory
- Approval of the General Meeting of the Company if necessary
- Possible licences or administrative authorisations
- Employee contracts if transferred
- Certificates of being up to date with the Tax Authorities and Social Security
- Deeds of assets or real estate or property titles
In the sale of companies with a foreign buyer, certificates of Good Standing must be obtained, powers of attorney granted abroad, obtaining NIF and NIE, and the necessary documents must be presented with an apostille.
Learn what the Hague Apostille is:
What happens after the sale of a company?
Although a business sale in which the shares and stakes of the company have been sold is a more straightforward process, in the sale of a business by assets, the process can be longer.
Firstly, due to the transfer of assets and liabilities, but also because of the modification of the Real Ownership Deed, the communication of the change of ownership in the Registers, the creation of new employment contracts for the employees and the change of employer in Social Security. If it is a business where licences are involved, the name change must be processed, it must be notified in the trademark, updated in the Company Register, etc…
You can learn more about the sale of pharmacies with licences here:
And if necessary, review the rental or ownership contracts of offices, warehouses or shops to transfer or subrogate them.
Taxation of the sale and purchase of a company
One of the most important aspects to consider in a business sale transaction is taxation.
It is important to process the sale of assets as an “autonomous economic unit” so that it is not subject to VAT.
- Taxes on the purchase of companies: the buyer is subject to Personal Income Tax if they are an individual and if there is a capital gain
- Taxes on the sale of companies: Corporation Tax if the seller is a holding company and Corporation Tax if the sale of assets takes place
FAQ in Business Buying and Selling
It approximately requires a period of 3 to 6 months.
In large companies, corporate decisions, the volume of documentation and agreements, signatures and clauses of the operation, are usually more complex, so the time is usually longer.
Conclusion: buying and selling companies in Barcelona
The sale of a company requires a rigorous legal analysis and proper documentary formalisation. Every detail, from drafting the contract to verifying powers of attorney, statutes or licences, can have significant tax and legal consequences.
Trust our notary office in Barcelona and our Notaries for sales. We accompany you throughout the entire process and guarantee that the business sale transaction is carried out with complete legal security, verifying the corporate documentation, tax conditions and the correct registration entry.
At JLA Notarios, we are a notary office for companies where we also provide our services online. Discover our online notary service through which we process a large part of the deeds for companies that we handle. Contact us via WhatsApp or through the website’s contact form to receive specialised advice on commercial and corporate transactions.
