Business Sales: The Final Steps

Final negotiations in the case of a company sale

After the due diligence process is completed, final negotiations begin. This is the phase of business sales where all remaining details and conditions of the sale are set out. Examples of outstanding areas to discuss and negotiate with the buyer include:

Purchase price and possible adjustments: After due diligence, the buyer can argue for a reduced purchase price depending on what has emerged during the due diligence. Ultimately, it becomes a matter of negotiation between buyers and sellers whether to change the purchase price or the structure of the transaction compared to previous agreements.

Warranties: Through a share transfer agreement, the seller usually provides a relatively large number of customary guarantees to the buyer, such as that the seller has full ownership of the shares and that the financial information provided during due diligence gives a fair view of the company's position. In addition to customary warranties, the Buyer may argue that additional warranties should be provided depending on what due diligence has led to the observations and risks. This means that the seller undertakes to compensate the buyer for any losses that may arise due to these circumstances.

Pre-admission commitments: In some cases, there may be specific commitments that the vendor must fulfill before access can occur, such as closing specific projects, complying with regulatory requirements, or dealing with debt. These commitments must be clearly established during the final negotiation and, in connection with access, the seller will need proof that the commitments have been fulfilled.

Signing of final agreements

Once all the details have been negotiated and both parties agree, it is time to formally sign off on the final agreements. This step marks the legal bond between the seller and the buyer and means the deal is now formally approved by both parties. The share transfer agreement governs the actual transfer of the shares. If the seller is to remain with an ownership, a shareholders' agreement is also signed upon admission. Examples of other agreements that may be relevant include a new employment contract.

Accession: the transfer of ownership

After all contracts have been signed, access takes place — the formal moment when ownership of the company passes from the seller to the buyer. The access may occur at the same time as the signing of the contracts, but in some cases it may take place at a later date, depending on specific terms of the contracts or commitments that the seller needs to complete.

To ensure that the transition of ownership occurs as smoothly as possible, it is important that all documents and processes are in place. Here are some tips to ensure a successful transition:

Communication: Maintain an open and continuous communication with the buyer throughout the process to avoid misunderstandings and to be able to quickly deal with any problems that may arise.

Preparation: Prepare all the necessary documents in advance and ensure that all commitments are fulfilled before access takes place.

Engage advisors: Use legal and financial advisors to ensure that all aspects of the deal are properly handled and that your interests as a seller are protected.

Focus on the details: Be careful to ensure that all the little details are in order, from the transfer of assets to legal formalities. Small mistakes can lead to big problems if not handled properly.

At FLB Partners, we offer expertise and support throughout the entire sales process, from the preparation phase to the completed sale. Contact us today to discuss how we can contribute to a successful business sale.