As we described in the previous article, preparing a company for sale is as important as the sale process itself. Can we sell the company without that prior?
The answer is undoubtedly yes, but in general it may harm the process. Poor preparation/planning can hinder or even break down negotiations, reduce our negotiating power and most likely result in less value than expected. Also, bad planning can probably increase the fiscal cost of the operation.
Let us focus on the minimum tax and legal measures to be analysed prior to the sale of any company:
- Measures related to the separation of social and company
. It is very important that the company only supports in its balance sheets those assets that really have a direct relation with the activity of the company (brands, patents, domains, machinery). It may also be important that private property and vehicles, for example, are linked to the company’s partners or asset-holding companies and not to the company for sale. Remuneration, transfer of capital, etc. should also be governed by market prices/uses.
- Aspects related to the asset structure.
If possible, it would be advisable to analyse the creation of a holding company to avoid over-taxation. Likewise, the beneficial or penalising tax impacts of the entry or replacement of investors, reorganisation of the group of companies in the group, etc., should be analysed.
- Analyse the tax incentives and requirements to be applied in the event of the sale of a company, such as incentives for reinvestment in new or recently created companies or the reduction in the tax base (10%) of the amount of the increase in equity.
- Analyze all those contracts that the company may have with third parties in case there are termination clauses due to a change of control. As well as analysing the non-competition and exclusivity clauses that are usually included in the sales contract.
- Last but not least, the corporate documentation must be up to date (deposit of the annual accounts, legalization of the books at the Commercial Registry, registration of the meetings of the Board of Directors, etc.). The analysis of the corporate agreements concerning the transfer of shares, rights of dragging or of preferential acquisition, etc.
- Analysis of the employment contracts of key employees and unmet labour obligations prior to the transfer.