Buying and selling a business: a step-by-step guide to the safe execution of the transaction

Buying and selling a business is a multifaceted process that requires careful planning and legal diligence. To ensure a smooth and safe closing of the transaction, follow this step-by-step guide:

Step 1: Prepare for the transaction

For the seller:

  • Get the company’s records in order, including financial statements and title documents.
  • Ensure that debt and other encumbrances are transparent.
  • The better organized the documents are, the quicker the transaction will go through, and the higher the buyer’s confidence level will be.

Step 2: Business Validation

For the buyer:

  • Conduct a legal and financial due diligence of the business.
  • Determine the real value of assets and liabilities.
  • Ensure that the business complies with applicable laws.
  • Identify potential tax risks and litigation.

Business due diligence allows you to minimize risks and assess the adequacy of the business price.

Step 3: Sale and Purchase Agreement

The contract is the backbone of the transaction. Make sure it is drafted skillfully and includes:

  • An accurate description of the property being sold (assets, equity stake).
  • Terms of payment (one-time, installments).
  • Liability of the parties for failure to fulfill obligations.
  • Guarantees of the seller about the legality of the transaction.

To minimize the risks, have the contract drawn up by a professional lawyer.

In the case of purchase and sale of shares in an LLC, the contract must also be agreed with the notary conducting the sale of shares in the company.

Step 4: Transfer of Title

For the seller and buyer:

  • Document the transfer of property with an acceptance certificate.
  • When selling a share in LLC, it will be necessary to update the data in the Unified State Register of Legal Entities.

Information about the new participant of the LLC is submitted by a notary after the certification of the share purchase and sale transaction.

The completion of the transaction must comply with legal regulations to avoid third party claims.

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