Selling a business is not a simple process. It requires a plan, a strategy, but also knowledge of the law. You should prepare for it diligently, whether it involves a sole proprietorship or the sale of a company to an investor. See how to sell a company and avoid mistakes that can affect the price.
Table of Contents
- Selling a Company – What Should You Know at the Beginning?
- Sale Of a Sole Proprietorship And a Company – Formal Differences
- Selling a Company to an Investor – Strategic vs. Financial
- Selling a Company – Preparations and Strategic Plan
- How to Value a Business Before Selling
- Who Can Help You in Selling a Company?
- Selling a Company Step By Step
- How to Sell a Company – Summary
- FAQ – Frequently Asked Questions on Topic: How to Sell a Company
Selling a Company – What Should You Know at the Beginning?
How to sell a company effectively and safely? You should start by understanding what is the subject of the transaction. This may be the sale of the company as a whole, the sale of shares or individual assets. Depending on the form of business (e.g. a sole proprietorship or limited liability company), the process will differ.
Selling a business requires considering issues such as:
- Purpose of the sale (e.g. market exit, succession, gaining capital),
- Type of investor (strategic/industry or financial),
- Timing and form of preparation for the transaction.
Sale Of a Sole Proprietorship And a Company – Formal Differences
The legal form of your business determines the legal structure of the sale. Here are the most common scenarios:
| Business Type | Method of Sale |
| Sole Proprietorship (JDG in Poland) | Sale of an enterprise or an organised part of an enterprise |
| Civil partnership | Disposal of assets, optionally restructuring and sale of shares |
| Limited liability company / joint-stock company | Sale of shares, stocks, organised part of an enterprise or assets |
The sale of a sole proprietorship often requires prior arrangement of the business and personal assets of the owner. In the case of capital companies, a common solution is to sell the company to an investor by transferring shares.
Selling a Company to an Investor – Strategic vs. Financial
Selling a company to a strategic investor means that the buyer is a company operating in the same industry. They usually want to expand their operations, acquire customers, or gain know-how.
Selling a company to a financial investor, e.g. s Private Equity fund, is a transaction with an entity that invests capital. The aim is to make a profit through a future resale.
| Type of investor | Characteristics |
| Industry/Strategic | He is interested in know-how, market, team, and operational processes |
| Financial | Focuses on performance, return on investment and risk analysis |
How to sell a company to an investor? Prepare a teaser, an information memorandum, and compelling arguments in favour of your business. Each type of investor expects different things. Understanding their perspective is crucial before the start of negotiations.
Selling a Company – Preparations and Strategic Plan
The sale of a company is not only a formal matter. It also requires an analysis of the company’s condition. Key elements of preparation include:
- optimisation of finances (balance sheet, income statement, cash flows),
- organising documentation and processes,
- identification and mitigation of risks (legal, tax, operational),
- review of contracts with employees and contractors,
- initial valuation of the company and monitoring of its changes.
This makes it possible not only to carry out the sale of the company safely, but also to increase its value.
How to Value a Business Before Selling
Selling a business without a valuation is like selling an apartment without checking market prices. The most commonly used methods are:
- DCF (Discounted Cash Flow) method – based on future cash flows,
- comparative method – based on similar transactions on the market,
- asset-based method – for businesses with substantial tangible assets
Business valuation helps set a realistic price and find areas for improvement before selling.
Who Can Help You in Selling a Company?
Selling your business professionally requires experienced, trusted advisors, e.g.:
- transaction advisor – leads the entire process and represents your interests,
- auditor – analyses financial data and supports in due diligence,
- lawyer – reviews contracts, NDAs and negotiates transaction provisions,
- tax advisor – secures the tax interests of the owner and the company.
Selling a Company Step By Step
The process of selling a company can be presented in a simple scheme:
- Prepare teaser documents and list potential buyers,
- Sign NDAs with selected investors,
- Conduct meetings and company presentations,
- Receive a Letter of Intent (LOI) from a potential buyer,
- Undergo due diligence (financial, legal, operational),
- Negotiate transaction terms,
- Sign and execute the sales agreement.
The duration of the entire process is usually from 6 to 12 months.
How to Sell a Company – Summary
Selling a business is a multi-stage, complex process. It requires knowledge, experience, and professional support. Whether you’re selling a company, a sole proprietorship, or negotiating with a fund, there are several factors crucial to success. Careful preparation, precise valuation, and a strong, solid strategy are the key.
Do you want to learn how to sell your business safely and with profits? Do not hesitate! Contact us and find out what a professional sale of a company to an investor looks like. With a good strategy and experts’ assistance, you can get a much higher price and avoid mistakes.
FAQ – Frequently Asked Questions on Topic: How to Sell a Company
1. How to sell a sole proprietorship?
By selling an enterprise or an organised part of the assets. It is often worth considering restructuring into a limited liability company.
2. What is the sale of a company to an investor?
It means transferring control to an industry or financial investor. Typically, by selling shares of the enterprise.
3. How long does it take to sell a company?
The process takes an average of 6 to 12 months.
4. Do you need a valuation before selling the company?
Yes – it is crucial to determine the value and prepare a strategy.
5. What documents do I need to sell my business?
Teaser, NDA, LOI, sales agreement, financial data, employee and corporate agreements.
6. Can I sell my business myself?
It is possible, yet the support of legal, financial and transactional advisors is recommended.
7. What is the difference between the sale of a company and liquidation?
Selling allows you to obtain the business’s value. Liquidation ends operations without transferring value.
8. How to sell a company to a foreign investor?
The process is similar, but requires more precise tax and language arrangements.
9. Is it possible to partially sell the company?
Yes – you can sell shares or an organised part of the company.
10. What is the sale of an organised part of an enterprise?
The sale of a specific part of the business that can operate independently.