Are you looking to buy or sell a business in Spain?
Are you looking to buy or sell a business in Spain?
Would you like to sell your business? Or, buy one? Hotel or winery? Maybe a construction company, or a tech start up?
No matter what the sector, your objective is to sell or acquire the business for the best possible price, with minimum tax consequences and no nasty surprises, during or after the operation has been completed.
AvaLaw can help you to make that happen. You can rest assured that we have already counselled a similar company to attain a successful result. We’ll be happy to provide you all the necessary advice on the legal and administrative hurdles that should be taken into account during the process.
If you wish to sell, but have not found a buyer yet – or if you want to buy but do not have a target yet, our sister company AvaM&A can do the search for you.
Watch our expert in Mergers & Acquisitions explain it all here:
FAQs on Mergers & Acquisitions
Knowing that a company is looking to be sold causes uncertainty amongst clients, banks, providers, and workers at the company. The competition can use the knowledge to their advantage in convincing customers or key-employers to abandon the “sinking ship”. That is why confidentiality is one of the most important factors in a successful M&A operation.
The search of purchase candidates should be done without revealing your identity. Only those serious buyer candidates who, after having seen the blind profile are still interested in the deal, after having signed a non-disclosure agreement (NDA) will be given the necessary details to proceed with the operation.
The Due Diligence process allows a potential buyer to learn the legal and technical details about a company they are about to invest in. It covers in detail the legal & financial matters of the company and its obligations, liabilities, existing contracts, situation with the current employees, etc.
The due diligence check list normally covers at least the following items:
- Finances (financial statements, margins, projections, working capital, need for expenditures and investments, EBITDA and adjustments to it, etc.)
- Customers and sales (key customers and percentage of revenue generated by them, risks related to key customers, pipeline, customer satisfaction, warranty issues with customers, sales terms, seasonality, etc.)
- Existing Contracts (insurances, guaranties, supplier contracts, partnerships, lease agreements, rental agreements, license agreements, distribution or agency agreements
- Technology and intellectual properties
- Employees (employment contracts, history of each employee, salaries and benefits, organisation chart, etc.,)
- Litigation and arbitration
- Taxes (municipal, autonomous community and state, tax inspections, transfer prices, etc.)
When you are acquiring a business, before contracting any legal, tax or labour due diligences, you probably want to know if acquiring the target really makes sense from a business perspective. What is the value of the target? How much should you offer for it?
The financial due diligence will help you to understand the business, its history, the current situation as well as the potential growth and profitability in the future. As an end result you will have an appraisal value and solid arguments that can be used in your favour when negotiating the terms of the acquisition.
When we start preparing the valuation, first we look into the history and legal structure of the target and identify any significant related party transactions or arrangements.
The next step is to analyse the earnings & cash flow. Here we calculate the adjusted EBITDA, analyse the profit by revenue stream and look into the key cost areas, such as labour, marketing, utilities and maintenance. It is also interesting to understand the underlying drivers and trends in the free cash flow.
The third step is to look into the net assets and funding items by analyzing the balance sheet. We will identify the areas of potential material overstatement of assets and understatement of liabilities.
We also analyse the net debt taking into account items that are included in working capital, but should more correctly be considered as net debt.
Based on all the above, we’ll provide an appraisal value of the business, that gives you tools for the negotiation of the final terms of the purchase. With the valuation and arguments at your disposal, you can start preparing a purchase offer, always subject to the positive outcome of the rest of the due diligence which will be carried out later.
In most M&A operations the buyer tries to gain a strategic advantage from the acquisition, not a stand-alone business. The buyer’s objective may be to cover new services to add to the existing ones, expand geographically to new markets, acquire new technologies, get rid of competition, etc.
The buyer may wish to pass on a family business for lack of succession, he may need to replace a partner who wishes to leave, or invest in the business to be competitive and does not have the necessary financing for that – or maybe he just wants to do something else for a change.
In addition to searching for synergies from a strategical point of view, depending on the side we are on (representing the seller or the buyer), AvaM&S’s objective is to identify the strengths and weaknesses of the company we are interested in, decide on how we wish to structure the operation, and find the arguments to convince the counter party to accept our structuring plan. In cases that we are representing the seller, when necessary, we restructure the company to be sold in order to maximise the value, for example by segregating activities, segregating real estate from the other assets, etc. As a result, we come up with solid sales arguments we can use to receive or pay the best possible price for the transaction.
Most operations in which AvaLaw has been involved fall into one of the following categories:
– Sales of the shares of a company
– Sales of the assets of a company
– Mergers of two companies
– Management-buy-out or buy-in operations (the so called MBO/MBI)
– Joint Ventures
– Project finance operations
From our experience, one of the most common reasons for a failure of any business are the challenges and troubles between the shareholders. The standard articles of association contain the basic rules regarding the relationship, rights and obligations of the shareholders, but we strongly recommend that you draft a private shareholder’s agreement. At best, it is a detailed guide-book of how to solve different unexpected situations in the future (one of the partners wishes to leave, some of the partners wish to force another partner out, some of the partners do not fulfil their obligations, there is a disagreement on how to move the business forward, etc.)
Here is a short check-list of the most common terms:
1. Obligations of each shareholder, for instance contribution of certain services for the company.
2. Circumstances, procedures and rules for the exit of a shareholder.
3. Different quorums to determine which decisions are made unanimously and for which the simple majority is enough.
4. Investment policy, policy of seeking financing and distributing of dividends.
5. Agreements between the company and the shareholders, such as managing agreements, licenses and know how, etc.
6. Confidentiality and non-compete clauses with the exceptions.
7. Consequences in breach of contract.
8. Dispute resolution.
9. Communication between the shareholders.
10. Valuation rules of the shares in case someone wishes to leave or is forced out.
“AvaLaw assisted us in investing in a business in Barcelona. The team was professional and diligent, and set up for us a good tax structure, as well as negotiated very beneficial terms for us”
Hi I’m Lourdes.
I’m an international lawyer with expertise in Corporate law.
I’ll be happy to help you answer your questions regarding Mergers & Acquisitions, so don’t hesitate to contact us