Business transfer checklist: the key points to remember

There are so many factors to consider when planning to pass on your business, so it is normal to feel somewhat daunted by the size of the task. Although we can’t do the work for you, we can still lend a hand by providing you with the key points to remember in this myLIFE checklist.

Personal preparation

• • Psychological aspect
  • Desired timeframe
  • Wealth aspects
  • Tax aspects of capital gains
  • Inheritance aspects

Due diligence

• • Company documentation (articles of association, minutes, management and audit reports, subsidiaries, etc.)
  • Ownership of securities
  • Licences and administrative authorisations
  • Main contracts signed
  • Company assets (real estate, intellectual property rights, equipment, inventory, etc.)
  • Tax aspects/VAT and tax.
  • Issues related to personnel (wage taxes and social security contributions, etc.)
  • Any past, existing and potential disputes
  • Compliance with legislation (GDPR, KYC, the fight against money laundering, etc.)
  • Public subsidies received and the conditions on which they are granted
  • etc.

Valuing the business

• • The asset-based method
  • The cash flow method (future earnings-based method)
  • The comparative method (market value-based method)
  • Goodwill/badwill (intangible factors)
  • Necessary arrangements
  • Economic environment and economic situation

Choice of buyer

• • Strategic or financial buyer
  • Family/Friends
  • Staff
  • Management buy-out (MBO)
  • Cooperative company (SCOP)
  • Clients
  • Suppliers
  • Competitors
  • Companies exchange
  • Private investors / Private Equity

Negotiation

• • Price
  • Shared deal or asset deal
  • Total or partial transfer
  • Immediate or gradual transfer
  • Transfer of management
  • Preservation of teams
  • Place of negotiation
  • Confidentiality management/Data room
  • External experts involved
  • Wording of the agreement
  • etc.

Shareholders’ agreement

• • Appointment clause for members of the management board
  • Clause on decision-making methods
  • Non-transferability clause for securities
  • Approval clause
  • Pre-emption clause
  • Confidentiality clause
  • Non-competition clause
  • Anti-dilution clause
  • Drag-along clause
  • Tag-along clause
  • Share liquidity clauses
  • Terms of accession clause
  • Duration clause
  • Applicable law and jurisdiction clause
  • Other (financing, investor or founding members protection, reporting requirements, etc.)

Expert involvement

• • Bankers
  • Lawyers
  • Chartered accountants

For further information on the subject, check out our special feature on business transfers on myLIFE. We hope you enjoy the read!