Buying or selling a company: what to prepare before you start

Two starting points: buying shares or buying assets

The first decision is what is being sold, because the risks, the formalities and the price depend on it.

• Buying the shares. The buyer acquires the whole company, with its history: contracts, debts, disputes and contingencies. The transfer of shares in an SL must be recorded in a public document (article 106 of the Spanish Companies Act, Ley de Sociedades de Capital) and is free between shareholders unless the articles say otherwise; in other cases the rules in the articles apply and, if there are none, the company must consent (article 107). The buyer is entered in the register of shareholders (article 104).
• Buying assets or a specific business. The buyer chooses what it acquires and leaves the rest of the company behind. If what is sold is a business, a workplace or an autonomous productive unit, the new employer takes over the employment and Social Security rights and obligations, and the seller and the buyer are jointly liable for three years for earlier employment obligations that have not been paid (article 44 of the Workers’ Statute).

If the seller of assets is a company, and they exceed 25% of the value of the assets in the last approved balance sheet, they are presumed to be essential and the general meeting, not just the directors, must decide (article 160).

If you are buying: what to prepare

1. The objective and the budget. What company you are looking for, why and how it will be financed.
2. Confidentiality. Before receiving information, a non-disclosure agreement (NDA) protects what the seller shows you.
3. The letter of intent or term sheet, which records the basic terms: indicative price, exclusivity and timescales.
4. Legal due diligence: the review of the company, its contracts, disputes, licences, property and employees. Its findings are used to adjust the price, ask for warranties or, if necessary, not to go ahead.
5. The valuation, with your financial and tax advisers.
6. The share purchase agreement (SPA), which sets the price and how it is paid, the conditions for completion, the seller’s representations and warranties and the indemnities.
7. Completion: public document, changes to the management body, notices and payment.

If you are selling: what to prepare

1. Put the company in order. Register of shareholders, minutes, accounts, contracts, licences and property in good standing. A company in order reaches the negotiation in a better position.
2. Resolve what you can before the buyer sees it: employment contingencies, disputes, defaults or contracts with change-of-control clauses.
3. Decide what is being sold: the whole company, part of the shares or just a business. Sometimes a prior corporate restructuring is advisable to separate what is sold from what is kept, such as the property.
4. Protect the information. Do not hand over documents without a confidentiality agreement.
5. Check the consents. The articles or a shareholders’ agreement may restrict the sale or give other shareholders pre-emption rights.
6. Plan what happens to the employees, contracts and licences.
7. Assess the tax impact of the sale with your tax adviser.

How it is paid: deferred price and warranties

It is common for the price not to be paid in full at signing. Part of it is deferred, tied to future results (an earn-out), retained until certain risks are resolved or deposited in an escrow account. Each formula protects one party, so they should be negotiated together with the seller’s representations and warranties and the indemnities if any of them proves false. Do not fix the completion date before knowing what the due diligence requires: realistic timescales leave time to review, negotiate and gather the consents.

If the buyer is a foreign investor

Foreign investments in Spanish companies are declared to the Register of Foreign Investments, and some require prior authorisation: those giving the investor 10% or more of the capital, or control, when made by residents of countries outside the European Union and the European Free Trade Association, or by investors from those territories whose beneficial owners are from outside, in certain sectors (article 7 bis of Law 19/2003). We explain this in our article on investing in a Spanish company and on our foreign investment page.

Can a sole director sell a company?

A director, sole or otherwise, does not sell the company: it is the shareholders who sell, with their shares. The director can only dispose of the company’s assets within their powers, and the sale of essential assets requires a resolution of the general meeting (article 160). If the director is also the sole shareholder, they can sell their shares, but they do so as a shareholder. We explain this in more detail on our page on directors’ liability.

An example

A business owner in Cártama, about to retire, wants to sell his carpentry business. Before looking for a buyer, he puts the register of shareholders in order, checks that the articles require the company’s consent to sell to a third party, signs a confidentiality agreement with an interested party and decides that the workshop will not be sold with the company but let to the buyer. Due diligence uncovers a contract with a change-of-control clause and an outstanding employment claim. The purchase agreement provides for part of the price to be held back until the claim is resolved, with a seller’s warranty covering that risk.

Common mistakes

• Setting the price before knowing what is being sold, without distinguishing shares from assets.
• Handing over information without confidentiality.
• Skipping due diligence out of trust in the seller or haste.
• Not adjusting the contract to the risks that appear in the review.
• Forgetting the consents required by the articles or a shareholders’ agreement.
• Not planning the payment. A deferred price without enough security is a risk for the seller.

When to consult a lawyer

• Before signing anything, even an agreement described as non-binding.
• When the other party presents its own contract.
• If the company has employees, property or disputes.
• If the buyer or the seller is a foreign national.
• If the price is deferred or depends on results.

In our business sales and M&A service we accompany buyers and sellers, including in M&A transactions, from the letter of intent to completion.

Author and sources

Author: Sara González Domínguez, a practising lawyer registered with the Málaga Bar Association (no. 8502). Sources checked on 6 October 2026.

• Spanish Companies Act (Ley de Sociedades de Capital), consolidated text from the Spanish Official State Gazette (BOE).
• Workers’ Statute, consolidated revised text from the BOE.
• Law 19/2003 on capital movements and economic transactions with other countries, consolidated text from the BOE.