M&A Blog Petr D.

Selling a Company, Part 2: Potential Buyers in the Market

Have you identified a buyer for your company? Connect with interested parties, negotiate terms, conduct Due Diligence, and finalize the sale securely with legal advisory support!

This article is a continuation of the post “I Am Selling a Company, Part 1: First Steps”


In the previous post, we summarized the process of successfully preparing a company for sale. Now we will examine the actual sales process, particularly how to approach potential buyers and negotiate with those who have already expressed interest in acquiring your company.

Finding a Buyer

Once you have prepared your company for sale, you can begin searching for a buyer. First, it is essential to conduct an initial analysis of the relevant market and potential buyers, which may include competing companies or contractual partners in the industry who may be interested in expanding their own business. To approach these potential buyers, it is advisable to prepare a brief offering letter with basic information about your company—be sure to summarize the key elements that may attract their interest.

Approaching Investors

When approaching investors and subsequently negotiating, we recommend signing a non-disclosure agreement (NDA) with interested parties to protect yourself from potential leaks or misuse of information about your business. After receiving non-binding offers from the approached parties, it is advisable to meet with them and select those with whom you wish to continue negotiations regarding the sale of the company.

Due Diligence

In the subsequent advanced phase of negotiations, buyers typically want to learn details about your company and verify them to ensure that purchasing your company does not present unexpected risks. This process is known as Due Diligence, and buyers will generally request various documents and information from you, often commissioning an external audit. Be prepared for the fact that the audit will primarily examine the actual functioning of the company, potential risks and weaknesses, not only from public registers and submitted documents but also through personal inspections of the premises or interviews with key employees.

More about “Due Diligence” can be found here.

Closing the Sale Agreement

If the selected buyer is satisfied with the results of the Due Diligence, you can conclude a sale agreement with them. The agreement will often take into account the results of the Due Diligence, and buyers will frequently request warranties and may adjust their offer for the purchase price of the share in the company accordingly.

 

When preparing and concluding the agreement, it is advisable to consult a legal advisor to ensure that the terms agreed upon in the contract will have the intended effects and do not pose any risks—such as the potential invalidity of any provision. After negotiating all terms and signing the agreement, you will only need to execute the sale, register it in the commercial register, and transfer the company to the new owner in accordance with the agreement.

 

More about the sale agreement here.

 

Buyers often require the establishment of a “transition period” during which you commit to remain with the company as a manager and ensure smooth operations. During this period, there is often a deferral of the purchase price payment and subsequent adjustment of the final price for the share based on the future financial performance of the company. There are many possible arrangements, and it primarily depends on mutual agreement.