Businesses

Businesses come to market quietly or not at all. An owner deciding to retire usually tells an accountant, a lawyer and one or two people they trust, and a sale is often agreed before anybody writes a description. Being in that conversation is the service.

Shares or assets

This is the decision that matters most and it is frequently made carelessly, because one side has a preference and the other has not thought about it.

Buying the company — the quotas of an Lda, the shares of an SA — means buying everything it has ever done. The trading history and the contracts, but also the tax position, the employment claims, the guarantees given to a bank in 2014 and the dispute nobody mentioned. Due diligence can find a great deal of that and cannot find all of it, which is why warranties and a retention exist.

Buying the assets — the property, the equipment, the stock, the name — leaves the history where it is. It is usually cleaner for the buyer, usually worse for the seller’s tax position, and it is often the reason a seller pushes for a share deal.

One thing to know before that conversation starts: a share purchase is not a way around transfer tax. Where more than half a company’s assets are Portuguese real estate not directly used in an agricultural, industrial or commercial activity — and note that services do not count, nor does dealing in property itself — and the transaction leaves any single shareholder holding 75% or more of the capital, IMT falls due on the property. It also falls due where the shareholders are reduced to two people who are married or living as partners.

Three things people get wrong about that rule. It is not “the buyer” who has to reach 75% — a sale that tips an existing partner over the line does it just as well. It is not discretionary: once the conditions are met the tax is due, and there is no case-by-case assessment to argue about. And it is charged on the value of the property, not on what was paid for the shares. It applies to the quotas of an Lda and the shares of an SA alike.

What comes with the business either way

Employees, by two different routes. Buy the assets and it is a transfer of an undertaking: the contracts, seniority, category and accrued entitlements move to you by operation of law, whatever the contract says, and the seller stays jointly liable for what was owed up to the transfer for two years afterwards. Buy the company and there is no transfer at all — the employer is the same legal person it always was, so the contracts simply continue.

Either way the staff are yours, and any figure for what a business is worth that does not account for them is not a figure. The one qualification is that an employee can object to a transfer on narrow grounds, so “every contract, automatically, always” is very nearly but not quite true.

What we do

We find the business, establish what is actually being sold, and make sure the structure of the purchase is chosen rather than inherited from whoever suggested it first. Where the property is the point and the business is incidental, we say so.