Mergers and acquisitions (M&A) go beyond buying and selling. An acquisition can be paid for in cash or through a share-for-share exchange; a merger combines two companies into one and means unwinding whatever is duplicated. That is why these transactions are prepared together with the group’s structure, and they often require a prior corporate restructuring, setting up a holding company or a capital increase.
Who we help
- Owners selling their company, because they are retiring, have no family successor or have received an offer.
- Buyers who want to acquire a business that is already up and running, to grow or diversify.
- Shareholders buying or selling their stake to the other shareholders.
- Foreign buyers acquiring a company in the province of Malaga, together with our foreign investment service.
When it makes sense
- You have received an offer for your company and want to know whether the terms are reasonable before replying.
- You are preparing to sell on retirement and want the company in good order so that it is more attractive.
- You want to buy a business and need to know which legal risks you are taking on.
- A shareholder wants to leave and the others will buy their shares, under the articles of association and the shareholders’ agreement.
- A merger or acquisition is planned within a group of companies.
What the engagement can include
- Letter of intent or term sheet: the key terms, exclusivity and confidentiality before work starts.
- Legal due diligence: review of the company, its contracts, disputes, licences, property, employees and risks, with a report of findings.
- Deal structure: buying the shares or the assets, a merger, a share-for-share exchange or a contribution in kind, and the consequences of each.
- Share purchase agreement (SPA): price, payment terms, seller’s representations and warranties, indemnities and conditions.
- Negotiation with the other side and its advisers.
- Warranty and deferred-payment mechanisms: variable-price models (earn-outs) linked to future results, price retentions and escrow accounts, to safeguard both parties against the unexpected.
- Completion: public deed, changes to the board and any required notices.
- Coordination with financial and tax advisers on valuation and tax impact.
What the scope depends on
- The size of the company and how complex its business is.
- Whether shares or specific assets are being bought.
- The depth and rigour of the due diligence, which determines whether an extended technical analysis is needed in critical areas such as employment contracts, pending litigation or inherited tax contingencies.
- Whether there is bank financing, deferred payment or a variable price.
- Whether it is a simple deal between shareholders or one negotiated with an outside buyer or seller.
Once we have studied the documents, we send you a quote tailored to your case.
How we work
- Initial contact. You tell us about your situation and send us the documents.
- Review of the documents and proposals. We review the documents and set out the possible routes, starting with the simplest one that achieves the goal.
- Quote and letter of engagement. We send you the quote and the letter of engagement in writing.
- Implementation and follow-up. We see the matter through to the end and coordinate with your tax adviser or accountants (gestoría), the notaries and the registries: the Commercial Register and the Land Registry.
Who handles your matter
Your transaction is handled directly by Sara González Domínguez, a practising lawyer (abogada) registered with the Málaga Bar Association (no. 8502), whose practice focuses on corporate architecture, holding companies and M&A transactions, always backed by the rest of the firm’s team.
If you are a buyer and have only just started looking, our guide to buying or selling a company will be useful.
Illustrative example: a buyer in Malaga acquires a maintenance company with twenty employees. The due diligence uncovers a claim from a former customer that did not appear in the accounts, and a hearing listed for an unfair dismissal claim by a former employee. Instead of abandoning the deal, the parties agree to hold back part of the price until they are resolved, together with a specific warranty from the seller for those risks.
Frequently asked questions
Do I need a lawyer to buy a business in Spain?
There is no legal obligation, but it is strongly advisable. A business purchase involves reviewing the company’s legal situation, negotiating a contract that allocates risks between buyer and seller and, if shares are bought, executing the transfer in a public document before a notary. Without legal advice, the buyer may take on debts, claims or contracts that were not reflected in the price.
What is legal due diligence?
It is an orderly review of the company being bought, before signing, to identify risks and check that what the seller says is true. The legal review covers the company, its contracts, disputes, licences, property and employees. It can be combined with financial, tax or employment reviews. Its findings are used to adjust the price, request warranties or, if necessary, walk away.
What does M&A mean?
It stands for mergers and acquisitions, the term used for corporate transactions in which companies are bought, sold, merged or integrated. In a small or medium-sized business, an M&A transaction is usually the purchase or sale of the shares of a limited company or of part of its business, a merger, or an acquisition paid for through a share-for-share exchange.
What is the difference between an M&A transaction and taking over a business?
When you take over a business (a traspaso in Spain), you acquire specific premises or a specific business, usually together with its lease. An M&A transaction affects the company itself: its shares are bought or sold, two companies merge, or one is integrated into another through a share-for-share exchange or a contribution in kind. It requires reviewing the whole company through due diligence, negotiating a purchase agreement with warranties and, often, adapting the group’s structure.
Is it better to buy the shares or the assets?
It depends. Buying the shares means acquiring the company with everything in it, including its risks and debts, and its contracts continue. Buying specific assets lets the buyer choose what to take, but some contracts, licences or employees may require formalities or consents. The tax impact is also different and must be assessed with an adviser.
How are shares in a Spanish limited company transferred?
Through a purchase agreement that must be recorded in a public document (article 106 of the Spanish Companies Act, Ley de Sociedades de Capital). The articles of association and any shareholders’ agreement must be checked first: unless they provide otherwise, a sale to a third party is notified to the directors and requires the consent of the general meeting, which can only refuse if it presents other buyers for all the shares, with priority for existing shareholders (article 107).
What is an SPA?
SPA stands for share purchase agreement, the contract for the sale of shares in a company. It sets out the price and how it is paid, the conditions for completion, the seller’s representations and warranties about the state of the business and the indemnities if any of them turns out to be untrue.
Can the price be paid in instalments?
Yes, and it is common. Part can be paid on signing and the rest in instalments, or part of the price can depend on the company’s future results. For the seller, it is important to agree security for the deferred payment; for the buyer, the right to hold back amounts if liabilities appear that the seller did not disclose.
How is the price of a business calculated?
There is no single method. The usual starting points are the profits or cash flow the business generates, the value of its assets and comparable transactions. The valuation is carried out by financial advisers. Our role is to make sure the contract correctly reflects that price, its adjustments and what happens if the reality of the business differs from what was disclosed.
How is a seller legally protected against non-payment of a deferred price?
When a company is not paid for in cash, the seller takes the risk that the buyer will miss the payment dates or run into unexpected difficulties. To safeguard the transaction, specific security mechanisms are built into the sale contract, from pledges over the very shares being transferred, so that the seller can recover control of the company in the event of non-payment, to first-demand bank guarantees, escrow accounts or the retention of part of the price until all the obligations have been fully met.