Steps, timelines and legal implications

At some point, many business owners conclude that it is time to transfer their company to a third party. The decision may arise from several reasons, such as retirement, lack of generational replacement, the desire to start new projects or the need to obtain liquidity. At GM Tax Consultancy, we understand that this process creates doubts and uncertainty. It is not only about finding a buyer, it is a procedure that involves economic valuation, negotiation, legal, tax and employment implications. For this reason, we have prepared this guide to offer you a clear and practical view of how the transfer of a company works, how long it takes and what consequences it has for you, your partners and your employees.

Step 1: Company valuation

The first step in any transfer is to determine the real value of your company. This valuation is not a simple accounting calculation; it is a comprehensive analysis that must reflect both the current financial situation and future potential.

Most common valuation methods

Our experts use different approaches depending on the type of company and the sector:

• Asset valuation: based on the company’s balance sheet and assets. It includes methods such as book value, adjusted value, liquidation value and replacement cost.
• Income valuation: analyses the profit and loss account, profits, sales or EBITDA.
• Goodwill: considers intangibles such as brand, clients and reputation.
• Discounted cash flows: estimate the company’s future income and bring it to present value.

In practice, negotiations usually focus on multiple EBITDA or revenue.

Duration of the process

The valuation can take around two months, provided the necessary documentation is available, such as balance sheets, contracts and annual accounts.

Step 2: search for buyers

Once the value of the company is known, the next step is to identify potential buyers. Discretion is important, and sensitive information should be protected through confidentiality agreements (NDA).

Possible interested parties

• Strategic clients or suppliers.
• Key employees within the company.
• Competitors seeking growth.
• Investment funds or companies specialised in buying and selling businesses.

Our experts usually recommend a combination of direct contacts and support from intermediaries specialised in mergers and acquisitions.

Step 3: negotiation and due diligence

The negotiation of a business transfer involves more than price. It is essential to define payment terms, deadlines, guarantees and additional clauses such as non-compete agreements. Before signing, the buyer will carry out due diligence. This is a legal, tax and employment audit where the company’s documentation is reviewed:

• Financial statements.
• Tax compliance.
• Employment contracts and commercial agreements.
• Licences, permits and possible contingencies.

This step ensures transparency and allows price adjustments if hidden risks appear.

Step 4: sale and purchase agreement

When everything has been reviewed, the transfer of shares or assets agreement is signed. It must be notarised and registered in the Commercial Registry. The agreement must include:

• Price and payment method.
• Delivery conditions.
• Guarantees for previous debts or obligations.
• Confidentiality and non-compete clauses.

At GM Tax Consultancy, we support our clients in drafting and reviewing this agreement to ensure that everything is properly regulated and to avoid future conflicts.

Process timeline

The time required to transfer a company depends on the complexity of each case. In general, the complete process can take between six months and one year, from the initial valuation to the signing of the agreement.

Employment impact of the transfer

One of the most sensitive aspects is the effect on employees. The law is clear:

• Employees keep their contracts, seniority and conditions.
• The new owner assumes all employment and social security obligations.
• Contracts do not need to be terminated or compensated unless later changes are agreed.

For staff, this means the transfer ensures continuity of employment, which gives stability and confidence.

Responsibilities after the sale

It is important to know that the transfer of the company does not automatically release you from all previous obligations.

• The law can establish joint liability between seller and buyer, especially regarding tax and employment matters.
• For this reason, many agreements include guarantees or price retentions to cover possible contingencies that arise after completion.

Our experts analyse each situation to reduce these risks and protect your interests.

Alternative transfer methods

In addition to a direct sale, there are other useful options in specific cases:

• Merger: two or more companies join to form a new entity.
• Spin-off: the company is divided into several entities, distributing assets and liabilities.
• Asset transfer: specific assets such as machinery, property or brands are transferred instead of shares.

These alternatives can be useful in complex operations or regulated sectors.

Special case: buying a company with money received through a donation

In Catalonia, there is a specific alternative: donating money to a descendant to acquire a company. The regulations allow a 95 per cent reduction in Inheritance and Gift Tax (with a limit of EUR 200,000) if conditions are met, such as:

• The money must be used to acquire shares of a company based in Catalonia.
• The transaction must take place within a maximum of six months. The recipient must acquire more than 50 per cent of the share capital and perform management functions.
• The donation must be executed in a public deed stating the purpose of the donated funds.
• There must be no connection between the company and the recipient.
• The company acquired must not have revenue above EUR 3 million (in the case of a company) or EUR 1 million (in the case of a professional business).

This option helps generational change and supports young entrepreneurs.

Comparison between transfer to a third party and liquidation

Unlike liquidation, transfer to a third party:

• Ensures business continuity.
• Generates higher economic value than selling assets alone.
• Maintains jobs.

Liquidation may be quicker, but it usually involves lower economic returns and contract termination.

Legal advice

In each transfer process, we work with a clear method:

1. Initial analysis of the company’s situation and the owner’s objectives.
2. Economic and tax valuation adapted to the sector.
3. Search for buyers and negotiate in safe conditions.
4. Legal and contractual support in all phases.
5. Tax reduction to reduce the tax burden.

Transferring your company to a third party is a complex process that offers opportunities. It requires analysing the value of your business, negotiating with potential buyers, complying with legal obligations and protecting your interests and your staff. At GM Tax Consultancy, we offer our tax and legal experts to accompany you every step. We know each company is different, and every owner has different goals. If you are thinking about selling your company to a third party, we can help you do it in an organised and efficient way with the confidence of being in good hands. Reviewed by Gerard Valldeperes Vilanova

Lawyer and Economist from Pompeu Fabra University, with a master’s degree in Law and in Legal-Tax Advisory. Specialist in taxation of individuals and companies, he joined the firm in 2020. Member of the Barcelona Bar Association.