Difference Between SPA and APA:

• SPA (Share Purchase Agreement): The buyer acquires ownership of the company by purchasing its shares or equity interests.

• APA (Asset Purchase Agreement): The buyer acquires specified assets and liabilities rather than the entire company.
  An escrow is a secure account in which a portion of the purchase price is held for a specified period to cover potential indemnity claims.

What Is Due Diligence and Why Can It Affect the Purchase Price?
Due diligence is a comprehensive review of a company’s financial, legal, tax, employment, commercial, and technical aspects. If potential risks are identified (e.g., litigation, contracts pending renewal, or EBITDA adjustments), the buyer may request price adjustments, a larger escrow (an escrow is a secure account in which a portion of the purchase price is held for a specified period to cover potential indemnity claims), or Warranty & Indemnity (W&I) insurance to protect against potential liabilities.

An indicative offer is a preliminary, non-binding proposal outlining a price range and key terms and conditions. The LOI (Letter of Intent) sets out the agreed terms, including price, transaction scope, exclusivity, timeline, and earn-out arrangements. It is typically partially binding, particularly regarding exclusivity and confidentiality clauses, while the final purchase price and definitive terms are established in the SPA/APA.

How Is a Business Valued? What Do DCF and EBITDA Mean?
Three valuation approaches are combined:

• DCF (Discounted Cash Flow): Estimates a company’s value based on its expected future cash flows.

• Market Multiples: Valuation based on comparable companies and transactions.

• Strategic Value (Synergies).
  In addition, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and its conversion into cash flow are analyzed. Following the acquisition, the buyer may carry out a Purchase Price Allocation (PPA) to allocate the purchase price for accounting purposes among the acquired assets and goodwill.

The process of buying or selling a business typically takes between 6 and 12 months, from initial preparation to closing. The timeframe depends on the industry, the size of the company, the number of interested buyers, and the scope of the due diligence process. Thorough preparation can help shorten the timeline.

The documentation typically required when buying or selling a business includes an initial business assessment and a comprehensive information package: Teaser, Non-Disclosure Agreement (NDA), Information Memorandum (IM), KPIs and financial forecasts, key contracts, organizational chart, and a well-organized data room covering financial, legal, tax, employment, and commercial information.

The following documents are typically prepared:

• Blind Teaser (a summary without sensitive information).

• NDA (Non-Disclosure Agreement, Confidentiality Agreement).

• IM (Information Memorandum, a comprehensive sales document outlining the company’s history, financial data, and business plan).

• KPI (Key Performance Indicators, indicadores clave).

• Data Room (secure document repository) and a Q&A (Questions & Answers) channel for potential buyers.

Selling a business due to retirement involves planning the sale 12–24 months in advance to reduce dependency on the founder, strengthen the management team, and document business processes. Following the closing, Post-Merger Integration (PMI) establishes how the business and its knowledge are transferred. Earn-outs (variable payments linked to EBITDA, revenue, or customer portfolio targets) and transitional support periods help align business continuity with the agreed sale price.