Before you sell
Most people sell a company once in their life. What is worth knowing before you begin, with us or with another buyer. It is not legal or tax advice, and it does not replace your accountant.
Selling the company, or selling the business
At this size the usual route in Portugal is a sale of the share capital (quotas or ações): the buyer takes the company as it stands, with its history, its contracts, its licences and its liabilities. The alternative is a trespasse or asset sale, in which the business transfers but the company does not.
The choice changes the price, the tax, and what happens to contracts, licences and staff. It is worth knowing early which of the two is on the table.
What a serious buyer will want to see
| Accounts | The last three years. The IES is usually enough to begin |
|---|---|
| Customers | What the largest three are worth as a share of turnover |
| Team | How many people, and who supervises the work when the owner is away |
| Licences | IMPIC alvará or título de registo, and DGEG installer registration where it applies |
| Tax standing | Clear standing with the tax authority and social security |
| A second in command | One person besides you who can quote, negotiate and fix things, and whom the customer already knows |
| Boundaries | What belongs to the company and what belongs to you: property, vehicles, your own remuneration |
Preparing without stopping the business
The two things that weigh most at this stage are not financial. The first is whether the company works when the owner is not there: if it is you they call to quote, to negotiate and to fix, that becomes visible within two weeks of diligence, and it shows up in the price. The second is whether the numbers are reliable.
Neither is fixed on the eve of a sale. If your horizon is a year or two, that is where the time pays best.
Tax
A sale of quotas by an individual gives rise to a capital gain taxed under IRS, category G. Where the holding sits inside a company, different rules apply. And the shape of the deal changes what is left after tax: cash at closing, deferred payment or keeping a stake.
We do not give tax advice, and you should be wary of anyone who gives it before seeing your accounts. Talk to your contabilista certificado early, and to a lawyer before you sign anything.
How long it takes
For a company of this size, four to eight months from first conversation to completion is a fair expectation. Much faster usually means someone has not looked carefully. Much slower usually means someone lost interest and did not say so.
Warning signs
Three things worth stopping over: a buyer who cannot explain clearly where the money comes from, a price that falls after you have already given the process months, and pressure to sign exclusivity before there is a number in writing.
Be wary, too, of any buyer who gives you a price before seeing your accounts. A number given over the phone, without a single year’s figures, is not an offer.
Mistakes to avoid
- Giving a price before the accounts are in order. The first number you say becomes the ceiling of the conversation, and the normalisations you have not yet made typically move the company’s result by more than 30%.
- Talking to many buyers at once. Each of them learns how you work, what you charge and who buys from you, and most of them will not buy. If one of them is a competitor, that cannot be undone.
- The team finding out too early. Six months can pass between knowing and anything being decided, and it is in those six months that the uncertainty does the most damage. When to tell them is your decision, but it is better to wait until something has been decided.
- Accepting exclusivity with no deadline. While it lasts you cannot talk to anyone else, and whoever holds it has no reason at all to hurry.
- Signing a letter of intent without understanding what it fixes. Almost all of it is non-binding, and two things do bind: confidentiality and exclusivity. That is why a letter of intent is read with your lawyer, even when you are told it is only a piece of paper.
What to ask a buyer
- Where does the money come from? A good answer names the source and where it stands: capital already committed, financing already approved, or the date by which both will be in place, always before signing. Ask for that to be written into the letter of intent.
- Who decides? A good answer is a name and a mobile number, and the same person who was at the first meeting. If there is a committee, a good answer says when it meets and what has already been put to it.
- What happens to the team? A good answer is specific about the roles that are duplicated between the two companies, because those are the ones at stake, and not a general guarantee that nobody leaves. Ask for that answer in writing.
- Is there a deadline to resell? A good answer states the deadline, if there is one, without evasion. Anyone who says they have no deadline should be able to explain why in terms of structure rather than intention: who the investors are, what obliges them and what does not.
- Have you bought before? If so, a good answer gives you the name and number of someone who has sold to them, and lets you call without anyone listening in. If not, they should say so plainly and tell you who on their side has done this before.
- Who is my counterpart? A good answer tells you who negotiates with you, who will answer for the company afterwards, and when you will meet both.
What kind of buyer is in front of you
A family member, the people running it, a competitor, a fund or a permanent buyer buy for different reasons, and that decides what happens to the name, the team and you. We compare them side by side in Who to sell to?
If you would like to see how a sale unfolds with us, read our process.
Speak with Pedro
Pedro Teixeira Duarte
President
From the first call to signature, the person you deal with is Pedro. You can call without giving the name of your company: the first conversation is private and commits you to nothing.