A business unit sale is a complex transaction that involves the transfer of a specific, organized part of a business to a new entity.
This process, distinct from selling the entire business, allows a company to transfer only a section or operating unit while keeping the rest of the business intact. It is a strategy used to focus on core businesses, resolve financial issues, or restructure the business organization.
What is a Business Unit?
A business unit is a part of a business that:
Has its own autonomy: It can operate relatively independently, with dedicated resources, personnel, and facilities.
Has a specific organization: It includes assets, personnel, and activities that are oriented toward a common goal or a specific market segment.
Is capable of being transferred: It can be transferred as a separate entity, while retaining its operational identity.
Business Unit Transfer Procedure
Valuation and Planning:
Business Unit Valuation: Determine the economic value of the business unit, including tangible assets, intangible assets, existing contracts and personnel.
Strategic Planning: Establish the objectives of the transfer, such as improving liquidity, focusing on core activities or restructuring the business.
Negotiation and Agreement:
Identification of the Buyer: Find a potential buyer who may be interested in the business unit in question.
Negotiation of Terms: Define the terms and conditions of the transfer, including price, payment methods and guarantees.
Drafting the Contract: Draw up a detailed transfer contract that specifies all aspects of the transaction, including assets, rights, obligations and liabilities.
Due Diligence:
Verification: The buyer performs a thorough verification of the business unit, evaluating accounting documents, existing contracts, assets and liabilities.
Issue Resolution: Address any issues uncovered during due diligence to ensure a smooth transaction.
Formalization and Transfer:
Documentation: Complete all necessary documentation, including any notarial deeds, contract amendments and notifications to the relevant authorities.
Transfer: Conduct the physical and legal transfer of assets, contracts and personnel associated with the business unit.
Post-Transfer Management:
Integration: The new owner of the business unit will need to integrate the acquired unit into their organizational structure.
Ongoing Support: The transferor party can provide ongoing support to ensure a smooth transition.
Legal and Regulatory Issues
Employment Contracts:
Transfer of Personnel: Employment contracts of personnel assigned to the business unit can be transferred to the buyer, complying with labor regulations and ensuring employee rights.
Processing of Indemnities: Any notice pay, unused vacation and other entitlements must be managed.
Assets and Liabilities:
Inventory: All assets, equipment and materials associated with the branch must be inventoried and transferred.
Liabilities Management: Liabilities related to the branch of business must be clearly defined and managed in the transfer agreement.
Authorizations and Permissions:
Regulatory Permissions: Ensure that all authorizations and permits necessary for the operation of the branch are transferred or renewed in accordance with applicable regulations.
Information to Third Parties:
Communications to Suppliers and Customers: Inform suppliers and customers of the transfer to ensure continuity of operations and manage any changes in contracts.
economics
finance
negotiation