Sale of the company to third parties

Types of valuation:

• Asset-based valuation (balance sheet approach): This method estimates the company’s value by analysing its balance sheet and assets. It provides a static and non-evolutionary view. Approaches include book value, adjusted value, liquidation value and replacement value.
• Income statement-based valuation: This approach is based on the company’s income statement and is determined by factors such as profit levels, sales, EBITDA, dividend value and others.
• Goodwill valuation: This method assesses the company’s value above its book value, representing intangible elements not shown on the balance sheet, such as customer relationships, brand value and other intangibles.
• Cash-flow valuation: This method determines the company’s value by estimating the cash flows it is expected to generate in the future.

The choice of valuation method depends on the company’s characteristics and the context of the valuation. It is essential to select the method that best reflects the company’s true value and offers an accurate view of its financial and commercial position. Ultimately, valuation becomes a negotiating point between the parties. In most cases, the final price is set based on a multiple of EBITDA or turnover, depending on the sector and the specific features of the business.

Duration of the valuation process

The valuation process generally takes around two months.

It is necessary to determine which valuation method is most suitable for the company being transferred and to analyse the specific objectives to be achieved, as well as to gather all the required information and documentation.

When searching for potential buyers, several options are available, such as:

• Existing contacts and business relationships.
• Participating in industry events and trade fairs.
• Engaging specialised business brokerage firms.

Potential buyers may be found within your own team, as well as among suppliers and customers. They may also include companies dedicated to buying and selling businesses or even competitors looking to expand.

At the beginning of the process, a confidentiality agreement (NDA) is signed. Once general terms have been agreed, a Term Sheet is drafted, which outlines the key aspects of the transaction and the negotiation framework between the parties. This Term Sheet becomes the foundation for the entire operation and the subsequent sale and purchase agreement.

Before transferring your company, there are several important aspects to consider to negotiate the best possible terms.

First, ensure your financials are in order. Buyers will want to review the accounts and confirm that the business is profitable. For this reason, you cannot overlook the due diligence process.

It is also essential to be clear about your limits and objectives. Are you willing to negotiate the price, or are there aspects that are non-negotiable for you? These points must be well defined throughout the negotiation process.

Legal agreements

Every sale process concludes with a sale and purchase agreement. This document sets out all the terms of the deal, including the price, payment conditions and any other relevant clauses agreed with the buyer. Depending on your circumstances, additional legal agreements may also be required.

These may include confidentiality agreements (NDAs) to protect your business’s sensitive information during negotiations, or non-compete agreements to prevent you from selling the company and then starting a competing business.

At the beginning of the process, a confidentiality agreement (NDA) is signed. Once the general conditions have been agreed, a Term Sheet is drafted, setting out the key aspects of the transaction and guiding the negotiation between the parties. This Term Sheet forms the foundation of the entire operation and the subsequent sale and purchase agreement.

This will depend on several factors, including the complexity or urgency of the case. It may take several months, although it is common for the process to take around a year to complete.

The buyer of your business is required to assume all existing employment and Social Security rights and obligations. This means that the employment conditions of the affected workers will remain unchanged unless a modification is mutually agreed.

Cuando una empresa es transmitida a un tercero, la responsabilidad de la empresa hacia sus empleados, clientes y otros terceros no se ve alterada. Los compradores deben cumplir con todas las obligaciones legales y contractuales que tenía tu empresa antes de la transmisión. Esto incluye responsabilidades laborales, fiscales, ambientales y cualquier otro compromiso adquirido por tu empresa anteriormente. La transmisión de la empresa no te exime de tus responsabilidades (como anterior propietario), que pueden mantenerse solidariamente con los nuevos propietarios según lo establecido por la ley. Igualmente es bastante común exigir una garantía por las obligaciones anteriores, en forma de retención de parte del precio, especialmente si hay contingencias puestas de manifiesto después del procedimiento de “Due Dilligence”.

In addition to a direct transfer to a third party, there are other business transfer methods that may be used in certain operations, particularly when dealing with more complex transactions.

Merger

A merger involves the combination of two or more companies to form a new entity. In this case, the original companies cease to exist and a new merged entity is created. This new entity assumes the commitments and obligations of the pre-existing companies.

Spin-off

In a spin-off, a company divides its assets, liabilities and resources among two or more companies. This can be done for strategic reasons or to focus on specific areas of the business. Each new entity created in the spin-off assumes responsibility for the assets and liabilities assigned to it.

Transfer of assets or rights

A transfer involves conveying part or all of a company’s assets to another entity. This may include the sale of tangible assets, such as property or equipment, or the transfer of rights over intangible assets, such as patents or trademarks. The receiving entity assumes responsibility for the transferred assets and any associated obligations.

It is possible to sell the company to a young entrepreneur who acquires it using money received as a gift from their parents.

In Catalonia, a monetary gift made to descendants may qualify for a 95% reduction on the gifted amount, up to a maximum reduction of €200,000, provided the funds are used to establish a new business or to acquire shares in a company, in both cases with tax residence in Catalonia.

The following requirements must be met:

• The gift must be formalised in a public deed specifying the intended use of the funds.
• The acquisition must take place within six months of the gift.
• The donee’s net worth must not exceed €300,000.
• There must be no prior connection between the company and the donee.
• The acquired company or professional activity must not have had a net turnover in the last closed financial year exceeding:
  • Three million euros (company acquisition), or
  • One million euros (acquisition of a professional activity).
• The shares acquired must represent more than 50% of the company’s share capital.
• The donee must take on management functions.