Selling a Company in Spain: What Owners Should Know — Conclave Partners

Selling a business in Spain is not harder than elsewhere in Europe, but it is different in ways that surprise owners who have absorbed their expectations from Anglo-American deal coverage. The differences are procedural rather than commercial: what has to be signed in front of a notary, who has a right to buy before an outsider does, what follows the employees to the buyer, and who has to authorise the transaction before it can complete.

None of these stops a good business selling well. All of them can stall a process that meets them for the first time in month four.

This article sets out the mechanics that shape a Spanish sale, what buyers here actually examine, and what an owner should fix in the twelve months before going to market.

Most Spanish private companies are sociedades limitadas, and the S.L. form carries two features that shape every sale.

The first is formality. A transfer of participaciones in an S.L. must be recorded in a public deed before a notary. This is not a rubber stamp: the notary verifies identity, capacity and the content of the deed, and the transaction is not effective between the parties in the way an English share transfer form would be. Practically, it means the signing choreography, the powers of attorney for anyone not attending in person, and the notarial appointment itself all have to be planned rather than assumed.

The second is pre-emption. Under the Spanish Companies Act, transfers of participaciones to anyone outside the existing shareholder base, family circle or group are subject to a statutory right of first refusal in favour of the other shareholders unless the bylaws provide otherwise. The company must be notified, the other shareholders are given a period in which to take the stake on the same terms, and only then can the sale to a third party proceed.

For a sole owner this is background. For a company with minority shareholders — a former partner, a family branch, a manager who was given five per cent a decade ago — it is the single most important thing to read before starting. The bylaws may have modified the default, may require board consent, or may contain drag-along and tag-along clauses agreed long ago and forgotten. A buyer will read them on day one, and a seller who has not is negotiating without knowing whether they can actually deliver one hundred per cent of the company.

Sociedades anónimas are more flexible on transfer but bring their own formalities. Either way, the first document to put on the table is the bylaws, together with the shareholders' register and any shareholders' agreement.

Article 44 of the Workers' Statute governs business succession, and its effect is broader than many owners expect.

Where a business or an autonomous productive unit changes hands, employees transfer automatically with their existing terms, seniority and accrued rights. The buyer does not choose which employees to take, and the transfer is not by itself a valid reason for dismissal. Employee representatives must be informed before the transfer, and where measures affecting staff are envisaged, consulted.

The point that matters most commercially is the liability rule: transferor and transferee are jointly and severally liable for three years for labour obligations arising before the transfer and not satisfied. That means unpaid wages, misclassified contractors, unpaid social security contributions and pending claims do not disappear at completion — they sit with both sides, and the buyer will price the risk or demand an indemnity.

So the employment file is not a formality here. Expect diligence on contract types and any temporary contracts that should have been permanent, on the collective agreement that applies and whether it is being complied with, on registered working hours, on self-employed contractors who function as employees, and on social security payments and any inspection history. Spanish labour inspection is active, and an unresolved inspection is a specific, quantifiable problem that buyers deal with by withholding money.

For an individual seller, a gain on shares falls into the savings base of personal income tax. Since 1 January 2025, under Law 7/2024, that scale runs in five brackets from 19 per cent to a top rate of 30 per cent applying to the portion of the savings base above €300,000. For a business built over decades, most of the consideration will sit in the top brackets, and the number should be modelled before price is negotiated rather than discovered after heads of terms are signed.

Where the seller is a Spanish holding company rather than an individual, the participation exemption regime can substantially reduce tax on a qualifying disposal, subject to holding and percentage conditions and to the partial limitation of the exemption introduced in recent reforms. Whether your shares sit personally or in a holding company is therefore a structural decision with a large number attached, and it takes time to change — restructuring shortly before a sale invites scrutiny, so it belongs a year or more ahead of the process.

Structure also matters. Spanish buyers frequently prefer share deals, but where an asset or business-unit sale is contemplated, tax successor liability arises: a purchaser of a going concern can be pursued for the seller's outstanding tax debts relating to the business, and the standard protection is the certificate that a buyer may request from the tax authority, which limits that exposure to the debts it discloses. Any asset structure should build the request for that certificate into the timetable.

None of this is advice on your position, and it varies by autonomous community, since regional rules affect wealth and inheritance taxation and therefore the wider planning around a sale. It is, however, the arithmetic that decides how much of a headline price you keep, and it should be done early.

Spain operates a foreign investment screening regime, and it is one of the most common causes of a longer timetable when the buyer is not Spanish.

The framework sits in article 7 bis of Law 19/2003 and is developed by Royal Decree 571/2023, which entered into force on 1 September 2023. It requires prior authorisation for certain investments by foreign investors in sensitive sectors — critical infrastructure including energy, transport, water, health, communications, media and data processing, together with critical technologies such as artificial intelligence, robotics, semiconductors, cybersecurity and quantum computing, among others. The Royal Decree also clarified the perimeter, including thresholds such as a participation of at least 10 per cent and above one million euros in certain vehicles, and excluded from the definition increases in shareholdings that do not entail a change of control. Notably, it reduced the legal term for the screening procedure from six months to three.

For a seller, three practical consequences follow. First, whether your business falls within a sensitive sector should be assessed before the buyer list is drawn, not after an offer arrives, because it changes who is realistically able to complete and when. Second, where authorisation is required, it becomes a condition precedent with its own timetable, and no amount of commercial urgency compresses it. Third, if the screening question is genuinely uncertain, the sensible course is to establish it early with counsel rather than let two bidders price the same uncertainty differently.

Merger control is separate and less often triggered. Spanish clearance from the CNMC is required where the transaction results in a combined market share of thirty per cent or more in a Spanish market or product, or where combined turnover in Spain exceeds €240 million with at least two of the parties each exceeding €60 million in Spain. Most owner-managed businesses fall well below these thresholds, but a trade buyer with an existing Spanish position may not.

Beyond the universal financial review, expect concentrated attention on three areas.

Labour, for the reasons above, and in more depth than in many markets. The collective agreement that applies to your activity, its wage tables, and whether your practice matches it are examined closely, because non-compliance accrues quietly and transfers loudly.

Real estate and licences. Whether you own or lease your premises, buyers check the licence of activity, the occupancy position, planning classification, and for industrial sites the environmental authorisations. In leased premises, they check whether the lease can be assigned or whether a change of control triggers landlord consent or a rent review.

Public grants and subsidies. Spanish businesses frequently hold regional or national grants, including funds linked to European recovery programmes, and these usually carry conditions on maintaining activity, employment or assets for a defined period. A change of ownership can trigger a repayment obligation. This is one of the most frequently overlooked items in Spanish diligence, and one of the easiest to check in advance.

Add to this the accounting question every buyer everywhere asks: whether the reported profit is the real profit. Adjustments a buyer can verify survive; adjustments resting on the owner's word push them to discount the whole figure. In the experience of Conclave Partners, the Spanish variant of this problem is usually not aggressive accounting but incomplete separation — property, vehicles, family salaries and personal expenses mixed into the operating company — and it is straightforward to unwind if the work starts a year ahead.

Spanish trade buyers and family groups are the most frequent acquirers of owner-managed companies, and they move fastest because they know the labour framework, the notarial process and the sector.

International strategic buyers are active across Spanish industry, and pay for market access, capacity and customer relationships. They are the buyers most likely to encounter the foreign investment screening question.

Private equity is well established in Spain, with domestic funds active in the mid-market and international funds above it. They pay for management continuity and for a business that can absorb add-ons, and they are the most demanding on the quality of financial information.

Management buyouts and family succession remain common at the smaller end, and are usually the most financing-constrained.

Which of these values a specific company highest depends on what is actually being sold — a customer base, a licence, a location, a team, or an installed capacity — and Conclave Partners establishes that before any approach is made, because in a market this regional an approach to the wrong audience is also the fastest way for the process to become public.

Expect a letter of intent that is short, non-binding on price and binding on exclusivity and confidentiality, followed by diligence, then a share purchase agreement executed as a public deed.

Expect representations and warranties concentrated on labour, tax and licences, with specific indemnities where diligence has found something concrete. Warranty and indemnity insurance is available and increasingly used in mid-market Spanish deals, but it excludes known issues, so anything diligence has identified is priced or fixed rather than insured.

Expect escrow or a price retention where labour or tax exposure is open, sized against the three-year liability window rather than an arbitrary period.

Expect the buyer to require the seller's continued involvement for a transition, and where the business depends on the owner's relationships, expect an earn-out proposal attached to it.

And expect the notarial appointment to be a real scheduling event, with powers of attorney prepared, apostilled and translated well in advance for any foreign party.

Read the bylaws and the shareholders' agreement, and establish exactly what consents, pre-emption rights or drag-along mechanics apply to a sale.

Reconcile the shareholders' register and clean up any historical share transfers that were never properly documented.

Audit the labour position: contract types, compliance with the applicable collective agreement, working time records, contractors who function as employees, and social security status.

Resolve any open labour or tax inspection rather than carrying it into the process.

Review every grant and subsidy for change-of-control and maintenance conditions.

Confirm the licence of activity and, for premises you lease, whether assignment or change of control requires landlord consent.

Model the tax outcome personally and, if a holding structure is appropriate, implement it early enough that it is not a pre-sale manoeuvre.

Separate personal and family costs from the operating accounts and produce three clean years.

Reduce dependence on you personally, in both customer relationships and day-to-day management. Sellers who ask Conclave Partners where to begin in Spain are usually pointed at the bylaws and the labour file, because the first determines whether you can sell the whole company and the second determines how much of the price survives to completion.

A prepared Spanish company typically takes six to nine months from launch to completion, and longer where foreign investment authorisation, merger control or a complex shareholder structure is involved.

Diligence tends to run through a data room with Spanish counsel on both sides, and the labour and tax strands generate most of the questions. Where the buyer is foreign, allow time for translation of core documents and for the apostille and power-of-attorney logistics that the notarial process requires.

Confidentiality is manageable, but Spanish business communities are regional and dense, and news travels through suppliers, advisers and the sector association faster than owners expect. A staged disclosure plan and a controlled process are worth more here than a wide, fast approach.

Timing the launch matters commercially. Spain effectively pauses in August, and a process that reaches its most delicate moment in the first week of that month will lose four weeks it does not get back. In our experience at Conclave Partners the difference between a September launch and a June one is frequently a full quarter of elapsed time, which is itself a negotiating position.

Usually yes, unless the bylaws say otherwise. For a sociedad limitada, the Spanish Companies Act gives the remaining shareholders a statutory right of first refusal over transfers to third parties outside the permitted circle. The company must be notified and a period allowed for that right to be exercised. Read the bylaws first, because they may have modified the default or added consent, drag-along or tag-along provisions.

They transfer automatically with existing terms, seniority and accrued rights under article 44 of the Workers' Statute, and representatives must be informed beforehand. Critically, seller and buyer are jointly and severally liable for three years for pre-transfer labour obligations that were not met, which is why buyers examine contracts, collective agreement compliance and social security so closely, and why they hold money back where anything is unresolved.

For an individual, the gain falls in the savings base of personal income tax, which since 1 January 2025 runs from 19 per cent to a top rate of 30 per cent on the portion above €300,000. Where the seller is a holding company, the participation exemption regime may substantially reduce the charge, subject to conditions. The structure has to be in place well before a sale, so model it a year ahead.

Sometimes. Spain's screening regime under article 7 bis of Law 19/2003 and Royal Decree 571/2023 requires prior authorisation for certain foreign investments in sensitive sectors including critical infrastructure and critical technologies. Where it applies, it becomes a condition with its own timetable — the Royal Decree cut the procedural term from six months to three. Establish whether your business is in scope before you draw up the buyer list.

Yes, but the tax and liability profile changes. In an asset or business-unit sale, the buyer can be pursued for tax debts relating to the transferred activity, and the usual protection is a certificate requested from the tax authority limiting that exposure to what it discloses. Employees still transfer under article 44. Decide between shares and assets with tax and legal advice before the process opens, because it changes both the price and the buyer list.

Six to nine months from launch to completion for a prepared business, longer where foreign investment authorisation or merger clearance is required, or where the shareholder structure needs tidying first. The preparation that determines the price — bylaws, shareholders' register, labour file, grants review and clean accounts — needs about twelve months before that.

Ildar Zakirov — Conclave Partners ildar@conclavepartners.com

Sergi Kosiakof — Conclave Partners sergi@conclavepartners.com