How selling a company works

What phases does a company sale go through?

The table follows a sale in which the seller negotiates exclusively with one buyer after the first offers. In a bidding process, some steps shift; more on this below.

What happens before the first contact with buyers?

First, the seller clarifies what they want: to sell all or part of the company, to exit right away or to stay on for a transition period. Then they choose their advisors, usually an M&A advisor, a lawyer and an accountant, put contracts and financial statements in order and compile the documents. Some sellers have their company reviewed in advance, with a vendor due diligence. Our guide on preparing a company sale explains how this works in detail.

How is the value determined?

Advisors usually take two approaches: the discounted cash flow (DCF) method, which discounts future cash flows to today, and multiples, such as a multiple of the EBITDA of comparable companies or transactions. With Swiss SMEs, you will also come across the practitioners’ method. It combines the earnings value and the net asset value, and the tax authorities also use it to calculate the value of unlisted companies (SECO’s SME Portal).

The starting point is adjusted figures and a business plan that is consistent with past results and the contracts; our guide to financial due diligence shows what gets reviewed here. The valuation produces a range. The price is only set in the negotiation.

How does the seller find buyers?

The advisor draws up a long list of potential buyers and narrows it down with the seller: companies from the same industry (strategic buyers), financial investors such as private equity firms and family offices, the company’s own management, or outside managers who want to take over a company. Those on the short list receive a teaser, an anonymous short profile that leaves out the company’s name.

Anyone who wants to know more signs a non-disclosure agreement (NDA). Only then do they receive the information memorandum, a detailed presentation of the business, market, customers, organization, figures and plan. If an interested party is a competitor, the seller holds back sensitive details such as the terms of individual customers for longer.

What goes into the indicative offer and the letter of intent?

In the indicative offer, an interested party states a price range, the planned financing, their conditions and what they want to review in the due diligence. This is not yet binding. The seller then meets the suitable interested parties, and management presents the company.

The letter of intent (LOI) sets out the main terms: price or price range, deal structure, timetable and conditions. It usually grants the buyer exclusivity for a set period, during which the seller negotiates with no one else. As a rule, the letter of intent is binding only on certain points, such as confidentiality, exclusivity and costs.

What happens in due diligence?

The buyer reviews the company based on the documents in the data room: legal, financial and tax matters and, depending on the deal, also the market, HR, IT and the environment. The buyer’s advisors send a request list, ask questions and request missing documents; our due diligence checklist shows which documents are typically requested. The result is the due diligence report, with findings and recommendations.

For the seller, this is a demanding phase: they answer questions, provide additional documents and keep running the day-to-day business at the same time. The more complete the data room is at the start, the fewer follow-up questions come in. Our guide to the basics of due diligence explains what a due diligence covers in detail.

What does the purchase agreement cover?

In M&A, the purchase agreement is called an SPA (share purchase agreement) when shares are sold and an APA (asset purchase agreement) when individual assets and contracts are sold. It mainly covers:

• the purchase price and how it is set, through a locked box or closing accounts,
• payments after closing, such as an earn-out that depends on future results, or a vendor loan,
• warranties from the seller on the company, financial statements, contracts and taxes,
• indemnities for known risks and for taxes from the period before the sale (tax indemnity),
• the conditions for closing and the seller’s liability, including time limits and caps.

The seller usually discloses exceptions to the warranties in a disclosure letter. The due diligence findings determine where the buyer insists on a warranty, an indemnity or a lower price. Our guide to financial due diligence explains locked box and closing accounts, and our guide to tax due diligence explains the tax indemnity.

What is the difference between signing and closing?

At signing, buyer and seller sign the purchase agreement. At closing, the agreement is completed: the buyer pays the purchase price and the shares are transferred. Weeks or months can pass in between, because conditions have to be met, such as the consent of an important contractual partner or clearance from the competition authority. If the companies involved reach certain thresholds, the merger has to be notified before closing: in Switzerland to the Competition Commission (COMCO), in Germany to the Federal Cartel Office and in Austria to the Federal Competition Authority. If there are no such conditions, signing and closing can take place on the same day.

Depending on the legal form, the agreement has to meet certain formal requirements. To sell shares in a GmbH, you need a notarized agreement in Germany (Section 15 of the German Limited Liability Companies Act (GmbHG)) and a notarial deed in Austria (Section 76 of the Austrian Limited Liability Companies Act (GmbHG)). In Switzerland, written form is enough to assign shares in a GmbH (Art. 785 of the Swiss Code of Obligations (CO)).

Bidding process or negotiating with one buyer?

In a bidding process, also called an auction, the advisor approaches several interested parties at the same time and takes them through the process on a fixed timetable. After the indicative offers, the advisor opens the data room to a few bidders. They then submit binding offers, including their changes to the draft purchase agreement, and only then does the seller negotiate exclusively with one of them. Competition supports the price but calls for good preparation, because several bidders ask questions at the same time. For smaller companies and in succession, by contrast, the seller often negotiates with just one buyer early on.

What comes after closing?

After closing, the integration begins (post-merger integration). The buyer brings systems, processes and teams together, informs customers and suppliers and puts into practice what they set out to achieve with the purchase. In SME succession, the former owner often stays on for a transition period to hand over customers and know-how. Deadlines under the purchase agreement keep running, for example for warranties or an earn-out.

Where does majiq help in the process?

majiq helps with preparation and due diligence. It builds the list of required documents to match the country, legal form and industry, and missing documents are visible at once. Sellers, bidders and specialists work in the same data room: each role only sees the documents you release, and questions and answers stay linked to the document. majiq reads every document, checks it in context and writes the due diligence report, with every finding backed by evidence and a concrete recommendation. Your data is stored in Switzerland. More under Features and in the sample report.

Frequently asked questions

Read next

• Preparing a company sale
• What is due diligence?
• AI in M&A

As of November 5, 2026. This article is a general overview and does not replace legal or tax advice on a specific case.