Sellling / acquiring a business

A change of ownership of a business can be achieved through individual or universal legal succession in the business (ASSET DEAL) or via the acquisition of shares (SHARE DEAL).

Most commonly, a sale / purchase of a business goes through various phases, which are as follows:

LETTER OF INTENT (LOI): A letter of intent is most often issued as acknowledgement of the fact that a merger between companies or an acquisition is being considered seriously. With a letter of intent the exchanging companies acknowledge their serious intent and willingness to do business.

DUE DILIGENCE is the process through which a potential acquirer evaluates a target company or its assets for acquisition. In business transactions, the due diligence process varies for different types of companies. The relevant areas of concern may include the financial, legal, labour, tax, environment and market/commercial situation of a company. The focus of the legal due diligence lies on areas including structure and organisation of the company, intellectual, real and personal property, debt instrument review, long term agreements, validity of concessions and licences, as well as all kinds of possible liabilities and indemnity claims, further labour matters such as employee contracts and their benefit programmes.

CONTRACT NEGOTIATION / SIGNING: In this phase the involved parties draft and negotiate the provisions of the sale / purchase contract. After final agreement the necessary documentation and contracts are signed by the involved parties.

CLOSING: The finalizing of a sale / purchase of a company, share or property. On this specific date, ownership rights are transferred from the seller to the buyer.

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