Sale of a company or shares - What are the typical stages of the transaction?

Every sale transaction, whether it involves a company registered in the Central Register and Information on Economic Activity (CEiDG) or shares of a company registered in the National Court Register (KRS), is always a complex, multi-stage process. The following are the typical stages that make up a sale transaction:

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Signing a letter of intent or term sheet 

After identifying a potential buyer, the first step in selling a company is usually signing a Letter of Intent. This is a type of agreement that can be concluded in any form and typically includes the most important provisions regarding the transaction. Although there is no legal obligation to sign a Letter of Intent before proceeding with the sale transaction, it is worth considering, as the provisions contained within it can facilitate further negotiations. 

An alternative to a Letter of Intent is a Term Sheet. This is an agreement that more specifically and in greater detail than a Letter of Intent defines the key terms and conditions of the sale transaction. A Term Sheet often includes the already agreed-upon provisions, a transaction timeline, and unresolved matters. 

Both a Letter of Intent and a Term Sheet are not legally binding but often have significant negotiating significance. It is generally understood that the provisions set forth in a Letter of Intent or Term Sheet have already been agreed upon by the parties, and changing them can be difficult to negotiate. Often, the price of the company being sold or a formula for determining the price (such as a multiple of EBITDA for a given year) is already included in both the Letter of Intent and the Term Sheet. 

Due diligence 

The next stage of selling a company, which occurs in almost every transaction, is the legal and tax examination of the selling company, known as due diligence. Due diligence is a comprehensive audit that aims to verify whether there are any irregularities in the selling company that could directly affect its value. The results of due diligence can sometimes determine whether the buyer ultimately decides to proceed with the purchase of the company or shares in the company.  

Preparing for closing 

The most significant stage of selling a company or shares is the negotiation of the final sale agreement, often referred to as a Share Purchase Agreement (SPA). This is a crucial stage of the transaction because the sale agreement contains the most important provisions regarding the sale of the company or shares, such as the sale price, payment terms, security mechanisms for payment, the seller's liability, and limitations on competitive activities after the sale. 

In addition to the sale agreement, other documents related to the transaction are also finalized at this stage. The buyer of the company often expects the seller to continue operating it for some time, at least until the buyer becomes familiar with its operations or finds a manager to take over its management. Therefore, in addition to the sale agreement, agreements regulating the management of the company by the seller after the transaction are often concluded. 


The sale of a company is concluded with the closing, which involves the signing of the previously negotiated sale agreement and other documents related to the transaction. If the parties decide to sign a preliminary agreement before the final sale agreement, the closing takes place twice: through the signing of the preliminary agreement and then the final sale agreement for the shares or the company. 

The sale of a company or shares is always a complex transaction with significant consequences for both the seller and the buyer. Selling a company is also one of the possible paths to conducting a business succession. If you want more information on how to ensure that the succession of your company occurs safely and effectively, visit our website at PragmatIQ

Kacper Ziniak 


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