The sale of a company is an economical and legal transaction that includes the complete or partial sale of a business or shares in a business from the seller to the buyer. This process involves either the payment of the purchasing price by the buyer or the acquisition of shares in the buyers company.
The acquisition of a company includes buying or taking over a business. An acquisition is an economical and legal transaction that involves the complete or partial sale of a business or participation from the seller to the buyer. This process includes either the payment of the purchasing price by the buyer or the trade of shares.
Preparing the sale of a company includes multiple tasks. Strategic coordination is a prerequisite for a successful transaction.
The main objectives of a company sale are requirements with regards to content and timing set by the client.
The company evaluation is an essential part of preparing a sales transaction, especially in compliance with the requirements set by commercial and tax law.
In the preparation phase of the transaction, potential buyers will be chosen in collaboration with the client. There are two groups of buyers/ stakeholders: On the one hand there are holdings, financial Investors and family offices and on the other hand there are strategists, including customers, competitors and suppliers.
Smaller transactions usually include the acquisition of partner’s interest shares by the management.
The teaser is the main mean of sale. It elaborately, but anonymously introduces the company that is supposed to be sold. The teaser contains:
The prospective buyer submits an indicative offer to the seller, in order to enable the seller to determine whether he wants to accept the offer or develop a negotiation strategy.
The indicative offer is a prerequisite for the LOI (Letter of Intent), which both parties to the contract will sign. Signing the LOI is the preliminary stage of concluding the sales contract.
The LOI – Letter of Intent – is a preliminary stage of concluding the sales contract. Both parties to the contract sign it. The LOI usually contains the indicative offer with further rights and duties, e.g. costs of due diligence and a declaration that prohibits negotiations with other prospective buyers during due diligence. It also provides a schedule for due diligence further steps after finalising the process.
A company acquisition contract is a sales contract, which obligates the seller, to sell a company to the buyer. This process can be an „Asset Deal“ – the acquisition of an entire company, or a „Share Deal“ – the acquisition of shares in a company.
An Asset Deal includes following legal transactions:
- Assigning all claims
- Transferring movable objects and property (fixed assets)
- Transferring employees
The Share Deal is the most common form of acquiring a company. It usually includes the transfer of all partnership shares in a company to the buyer.
Takeover and Acquisition – Company Succession
Company Succession is the transfer of management and capital from one or more resigning shareholders of the company to one or more prospective shareholders.
A Share Deal is one of the two forms of acquiring a company (as well as the Asset Deal). It includes the purchase of shares in the company that is being sold by the buyer. A Share Deal can also be the partial acquisition of shares in a company.
The term asset deal denotes a company acquisition, which does not consist of buying the company as a whole, but the purchase of certain parts of the balance sheet. Assets – like property and real estate – have to be transferred individually to the buyer.
A transaction is the mutual transfer of assets and information between two economic entities.
The transaction volume shows all sold and bought partnership shares and balance sheet parts in a monetary way.
The company turnover includes the production volume sold by a company within one financial year.
A purchasing price is the price the buyer states, while intending to conclude a purchase.
The purchasing price can be fixed or based on negotiations. It can be influenced by multiple factors, e.g.: supply and demand, costs of manufacturing, profit margins, solvency oft he client, quantity, terms of payment (cash, cheque payment, loan).
M&A-Mergers & Acquisitions
A general term for transactions in the corporate sector, like mergers, company acquisitions, company transfers, leveraged buyouts, outsourcing/ insourcing, spin-offs, carve-outs or company cooperation. The sector of service providers like business consultants, auditors and investment banks working on projects in this area are summarized by the term Mergers & Acquisitions. M&A is a part of corporate finance in the sector of investment banking.