9 July 2026
Preparation
A successful acquisition starts with good preparation. Sometimes businesses are already preparing because they have their own intention to sell. But more often, they only start after being approached by a potential buyer. That is not ideal. It is best to get the company financially and administratively ready before one or more potential buyers have been found.
This includes reviewing the agreements to check whether there are any important contracts that give the other party the right to terminate if an acquisition takes place, so-called “change of control” clauses. It also means checking whether there are contracts in place with key business relationships at all. It is very conceivable that a business partner will start looking elsewhere if ownership changes. Sometimes this does not need to be reported to the business partner, and then they may not notice it quickly, but sometimes it does. These kinds of notifications are often specifically included in contracts so that a company knows with whom it is doing business. These are risks that can be prevented through proper preparation, and it also increases the value of the business. This is handled by the lawyer. A buyer absolutely does not want the risk that an important business partner will end the cooperation. Relying only on good faith, without contractually addressing these risks, is rarely sufficient in practice.
The acquisition process itself often starts with a confidentiality agreement, also known as a non-disclosure agreement (NDA). This allows the seller to share information without worsening its market position, especially where strategic buyers are involved, i.e. buyers in the same market or sector, or even competitors. It is advisable to have the NDA drafted by a lawyer, but in smaller transactions it is often prepared by an M&A adviser or even by the buyer or seller themselves.
Once some initial information has been shared, the buyer gains more confidence and it becomes clearer whether they really want to seriously pursue an acquisition. Shortly thereafter, a letter of intent (LOI) follows, usually set out in a term sheet.
Step 1: Letter of Intent / Term Sheet
The LOI / term sheet is the document in which buyer and seller record their intention to move forward with a business acquisition. The LOI / term sheet sets out the main outlines of the proposed transaction, so it is clear on which points the parties have already reached agreement and what the next stage of the process will look like. The document is intended to demonstrate serious intent, create a basis for negotiations, and prevent major misunderstandings later on.
At this stage, involving your lawyer and M&A adviser is highly valuable. These professionals know exactly what to look out for and how to negotiate effectively. That difference can quickly amount to hundreds of thousands or even millions of euros in a transaction.
The average entrepreneur has little to no experience with these types of processes, which means risks can easily be overlooked or agreement can be given too quickly to terms that actually turn out to be disadvantageous. Experienced guidance helps prevent unnecessary loss of value — and in practice often pays for itself many times over.
Step 2: Due Diligence
A due diligence investigation, also called a books and records review, is the investigation a buyer conducts before an acquisition in order to obtain a proper understanding of the business it wants to buy. The purpose is not only to review the financial information, but also to gain insight into the legal, tax, commercial and operational position of the company. In this way, the buyer avoids entering into a transaction on the basis of an overly optimistic picture and later being confronted with unexpected problems or hidden risks.
The buyer will normally engage both a lawyer and a financial adviser for this. Depending on the type of business, technical advisers or specialists may also be involved to properly review the underlying assets or operations. Examples include IT specialists, environmental experts in manufacturing businesses, or structural experts in property-intensive companies.
What comes to light during this investigation can have a direct impact on the final purchase price, the warranties, or even on whether the deal goes ahead at all. Thorough due diligence is therefore one of the most important steps in preventing surprises and disputes after the acquisition.
Step 3: The Purchase Agreement (SPA)
A Share Purchase Agreement (SPA) is the purchase agreement used in a share acquisition. In this contract, buyer and seller set out which shares are being sold, at what price and under which conditions the transaction will take place. The importance of an SPA lies mainly in the legal certainty it provides. In a share acquisition, the buyer does not only acquire the shares themselves, but indirectly also all assets, liabilities, rights and obligations of the company. That is precisely why it must be recorded carefully what the parties agree, how risks are allocated, and what happens if it later turns out that certain information was incorrect or if a condition to the transaction is not met.
A lawyer is almost always involved in drafting an SPA. Professional parties rarely do this themselves, given the legal complexity and the interests at stake. An exception may be made in smaller transactions, for example below EUR 500,000, where the parties trust each other a great deal and consciously choose to reduce costs and turnaround time.
The size and complexity of an SPA can vary significantly. In smaller transactions, it may be a relatively concise document of only a few pages, in which the most important arrangements are briefly recorded. In larger or more complex transactions, however, the SPA can grow into a very extensive document with detailed warranties, indemnities and annexes. How much is documented depends not only on the size of the transaction, but also on factors such as the complexity of the business, the outcome of the due diligence and the level of trust between the parties. As the parties know each other better or expect a longer-term cooperation, they sometimes deliberately choose to regulate certain risks in less detail.
There are also other ways to structure an acquisition, such as an asset/liability transaction. In that case, the shares are not acquired, but all assets and liabilities of the business. The legal entity of the seller is then liquidated after the transaction, since it often remains as an empty shell. The chosen acquisition structure often depends on the legal and tax advantages and disadvantages attached to it. In particular, the tax adviser and the notary can provide valuable advice here.
The moment when the purchase agreement is signed is also called the “signing.” This is not the same as the actual transfer of the shares or assets/liabilities. That takes place at a later moment, known as the “closing.” After the purchase agreement is signed, it becomes binding and the agreed steps are set in motion to reach the final closing.
Step 4: Shareholders’ Agreement
A shareholders’ agreement is an agreement between shareholders in which they record their mutual rights, obligations and cooperation. In the context of a business acquisition, such an agreement becomes particularly relevant when, for example, the buyer does not acquire all shares, when the seller remains partly involved, or when the business is acquired by multiple buyers who continue together.
The shareholders’ agreement then forms an important supplement to the articles of association, because it often contains the more specific arrangements tailored to the new relationship after the acquisition. If a shareholders’ agreement already exists, it must therefore be amended or replaced. In practice, this process runs in parallel with the drafting and negotiation of the SPA.
Although the shareholders’ agreement is an internal document and is often based on arrangements the parties have already made with each other, a lawyer can still play an important role. This ensures that the shareholders’ agreement aligns properly with the SPA and that no inconsistencies arise between the two documents. In addition, a lawyer helps ensure that all rights and obligations of the parties are recorded correctly and fully, so that the document also provides practical guidance when disputes arise.
The importance of a shareholders’ agreement in a business acquisition lies mainly in preventing future conflicts. After an acquisition, the balance of power within the company often changes: a new shareholder joins, an existing shareholder remains in a minority position, or the parties agree to cooperate for a certain period and aim for a future sale (a so-called “exit strategy”). In such situations, it is not enough to rely only on the articles of association and the statutory rules. The law provides only a basic framework, while the shareholders’ agreement allows custom solutions regarding processes, decision-making, dispute resolution, transfer of shares and exit strategies.
Step 5: Financing Documentation
The financing documentation in an acquisition normally concerns the buyer’s financing arrangements. These are agreements between the buyer and its financier, usually a bank, for the purposes of the acquisition. This includes, among other things, the loan agreement, security documentation (such as pledge and mortgage rights), corporate approvals and guarantees or releases of security. Although existing financing on the seller’s side also needs to be taken into account, this step is mainly relevant on the buyer’s side.
Tax aspects play an important role in the financing documentation, for example in relation to tax deductibility, capitalization or the tax consequences of granted security rights. A large part of the documentation is usually prepared by the financier itself, since it often works with standard documentation. Larger buyers, such as private equity firms, usually have standard processes in place for this, with specialized finance lawyers and legal specialists on the bank’s side closely involved.
The documentation itself depends heavily on the financing structure of the transaction. How payments will flow and which steps must be followed for incoming and outgoing cash flows is often prepared by the buyer in a “flow of funds” document. This is aligned with the seller and the notary so that everyone is on the same page for closing.
Step 6: Closing
Closing is the moment when the agreed transaction actually takes place. This happens before the notary. At closing, any final documents are signed, released or become effective. The flow of funds is followed by the notary, the legal transfer of the shares or assets takes place, and any security rights are established or released in accordance with the transaction terms. The steps depend on the satisfaction of the agreed conditions precedent and require careful coordination between the parties, lawyers and any other advisers and financiers. For both buyer and seller, closing is the culmination of the acquisition process, where the actual transfer of ownership and risk takes place.
If a business acquisition is coming up and you want it to be handled professionally from a legal perspective, please feel free to get in touch. We will be happy to help.