Complete guide to buying a company in Spain: the 8 steps of the acquisition process, financing, due diligence, negotiation, closing, and the most common buyer mistakes. With practical examples from the Spanish middle market.
Buying a company is one of the most significant decisions an investor or entrepreneur can make. Unlike starting from scratch, an acquisition provides an operational base, an existing customer portfolio, and a functioning team. But it also presents specific risks that should be thoroughly understood before taking the first step.
This guide summarises experience accumulated over more than fifteen years of buying companies in the Spanish middle market. It is written from the buyer’s perspective — which is the perspective we know best: we understand what we look for, what concerns us, and what makes us move forward or walk away from a deal.
The question is legitimate and deserves an honest answer. Buying a company has clear advantages over starting from scratch:
Cash flow from day one. An operating business generates revenue, has customers, and has a proven operational structure. An entrepreneur starting from zero may take years to reach that point.
Quantifiable risk. The target company has a verifiable financial track record. You can analyse three to five years of accounts, evaluate revenue quality, and project with reasonable confidence. A new venture starts from hypotheses, not facts. For a detailed comparison, see our analysis on buying a business versus starting from scratch.
Access to financing. Banks finance acquisitions of companies with a demonstrable track record. They do not finance ideas without traction. A company with three years of positive EBITDA is a bankable asset; a concept-stage project is not.
Accelerated growth. If your goal is to achieve a significant position in a sector, buying an established company saves years of organic market penetration. Sectoral consolidation is one of the most effective investment strategies in the middle market.
However, buying a company also has drawbacks: the entry cost is significantly higher, you inherit the seller’s contingencies (employment, tax, legal), and you must manage an organisation with its own culture and inertia. Not every investor is prepared for this.
Before searching for companies, you need to define clearly what you are looking for and why. Buyers who fail typically have one thing in common: they started searching without knowing exactly what they wanted.
Define your investment thesis. In which sectors do you have experience or competitive advantage? What size of company can you manage and finance? Are you looking for a platform to grow organically, or a base for consolidating a sector through successive acquisitions?
Establish search criteria. Minimum and maximum revenue, EBITDA range, geographic location, sector, level of founder dependency, growth potential. The more precise your criteria, the more efficient the search.
Assess your financial capacity. Determine how much equity you can contribute, what level of leverage is manageable, and what financing structure you will need. Without this prior analysis, you risk falling in love with an opportunity you cannot finance. Explore the options in our guide on financing a company acquisition.
Build your team. An M&A advisor (to identify opportunities and manage the process), a corporate lawyer (for negotiation and legal documentation), and a tax advisor (to structure the deal efficiently). All three are essential.
Finding the right company is, paradoxically, one of the biggest challenges in the process. The best opportunities rarely appear on business-for-sale portals. They come through professional networks, M&A advisors, and relationships built over years.
Search channels. M&A advisors with sell-side mandates, intermediary networks, specialised platforms, chambers of commerce, lawyers and auditors who know companies in succession or with a willingness to sell. For a current market overview, see our analysis of the business-for-sale landscape in Spain.
Preliminary evaluation. Before investing time and resources in an opportunity, conduct a quick analysis: does it fit your search criteria? Are the headline numbers (revenue, EBITDA, trend) consistent with what you are looking for? Is the reason for sale understandable and legitimate?
First contact. The approach should be discreet and professional. An NDA signed before receiving detailed information, respect for the confidentiality of the process, and a serious, prepared attitude. Sellers — especially founders of family businesses — are selective about which buyers they open their doors to.
Once you have identified an opportunity that fits your criteria, the next step is a preliminary financial analysis based on the available information (typically the information memorandum).
Valuation multiples. In the Spanish middle market, EBITDA multiples range from 4x to 8x depending on the sector, size, revenue quality, and growth prospects. Companies with recurring revenues, low customer concentration, and a consolidated management team trade at the higher end of the range.
Revenue quality analysis. Not all revenue euros are equal. Distinguish between recurring and one-off revenues, analyse customer concentration, assess the tenure of commercial relationships and the retention rate. Revenue quality matters more than volume.
Risk identification. What are the potential contingencies? Is there excessive founder dependency? Is the sector growing, stagnant, or declining? Are margins sustainable or inflated by temporary circumstances?
Indicative valuation. With all this information, build a valuation range that allows you to decide whether to proceed. Do not fall in love with the company before having the numbers clear.
If the preliminary analysis is positive and the valuation is compatible with your expectations, the next step is to submit a letter of intent (LOI). This document establishes the basic terms of the proposed transaction:
The LOI is not binding as to price, but it is a moral and practical commitment marking the start of the intensive phase. Do not submit an LOI unless you have a genuine intention to close.
Due diligence is the exhaustive verification process the buyer conducts before formalising the acquisition. It is the most critical phase and the most resource-intensive. We recommend consulting our dedicated buyer’s due diligence guide for an in-depth treatment.
Financial due diligence. Verification of financial statements, revenue quality, EBITDA normalisation, working capital analysis, net debt position. This is the foundation on which the final price is built.
Tax due diligence. Review of tax compliance, tax contingencies, corporate structure, related-party transactions. Tax contingencies are one of the most frequent findings in the Spanish middle market.
Legal due diligence. Customer and supplier contracts, pending litigation, intellectual property, regulatory compliance, corporate structure.
Employment due diligence. Workforce, collective agreements, employment contingencies, equality plans, pension commitments.
Commercial due diligence. Competitive position, market trends, customer satisfaction, commercial pipeline. This dimension is often underestimated and is, in our experience, one of the most valuable.
Operational due diligence. Processes, technology, asset condition, production capacity, critical dependencies.
Due diligence typically takes 4-12 weeks and requires active seller cooperation. Negative findings do not necessarily kill the deal, but they can — and should — adjust the price or structure.
The share purchase agreement (SPA) is the document that formalises the transaction. Its negotiation is technical and requires specialised lawyers on both sides.
Price and adjustment mechanism. The price may be adjusted at closing based on actual working capital or net financial debt versus estimated figures.
Representations and warranties. Seller declarations about the company’s situation. If they prove false, they entitle the buyer to indemnification.
Liability limits. Maximum (cap) and minimum (basket) limits on indemnification, typically 15-30% of the price.
Escrow mechanism. Retention of a portion of the price (10-20%) in an escrow account for 12-24 months to cover potential contingencies.
Non-compete clause. Restriction on the seller competing in the same sector for a specified period, typically 2-3 years.
Closing conditions. Regulatory approvals, third-party consents, absence of material adverse changes.
Closing includes the definitive signing of the contract, the transfer of shares, and payment of the price (less retentions and escrow). This is the moment you become the owner of the company.
Notarial formalisation. In Spain, the transfer of shares in a limited company requires a public deed before a notary.
Price payment. Bank transfer of the net amount, escrow constitution, and, where applicable, formalisation of bank financing.
Communications. Notification to employees, key customers, suppliers, and financial institutions. Managing these communications is critical to maintaining business stability.
Registry filings. Registration of the change of ownership with the Mercantile Registry.
Closing is not the end — it is the beginning of the most important phase: value creation. Post-acquisition integration is where the value of the investment is realised or destroyed.
First 100 days. Establish an action plan for the first 100 days: operational priorities, team communication, relationships with key customers and critical suppliers. Do not try to change everything at once.
Transition with the founder. If the founder remains during a transition period, define their role clearly. Ambiguity breeds conflict.
Quick wins. Identify rapid operational improvements that deliver visible results: cost optimisation, process improvement, professionalisation of financial management.
Medium-term strategic plan. Once operations are stabilised, implement the value-creation plan that motivated the acquisition: organic growth, geographic expansion, sectoral consolidation, or margin improvement.
In our experience, these are the mistakes that recur most frequently among buyers, especially first-time acquirers:
Overpaying through impatience. After months of searching, the temptation to close any deal is enormous. But paying an excessive multiple destroys returns and increases risk. Valuation discipline is non-negotiable.
Underestimating due diligence. Some buyers view due diligence as a formality. It is the process that protects them from buying problems disguised as opportunities. Never cut corners here.
Ignoring corporate culture. Companies are not just numbers. They have a culture, values, and ways of doing things. A buyer who ignores the existing culture and imposes their own from day one will encounter resistance, turnover, and talent loss.
Having no integration plan. Closing the deal without a clear plan for the first months is a recipe for chaos. Integration must be planned before closing, not after.
Relying on a single funding source. If all your financing depends on one bank, you are exposed to a last-minute credit refusal. Diversify your funding sources and have alternatives prepared.
The tax structure of the acquisition has a significant impact on investment returns. Key aspects include:
Share purchase vs asset purchase. The most common structure in Spain is a share purchase, which allows the seller to be taxed on the capital gain. An asset deal may be more favourable to the buyer in certain cases, as it allows the tax value of assets to be stepped up.
Goodwill. In a share purchase, financial goodwill may be tax-deductible under certain conditions and within limits established by current tax regulations.
VAT and transfer tax. The sale of shares is VAT-exempt. The sale of assets is subject to VAT (recoverable) or transfer tax depending on circumstances.
Interest deductibility. Interest on acquisition debt is deductible, subject to limitations (30% of operating profit, with a minimum exempt amount of EUR 1 million).
A tax advisor specialising in M&A is essential for optimising the deal structure without taking unnecessary tax risks.
Buying makes sense when conditions align: sector experience or access to it, sufficient financial capacity (equity plus debt), a market with reasonably valued opportunities, and a clear plan for post-acquisition value creation.
If you are considering the acquisition of a company in the Spanish middle market, Blue Mountain Capital can help you evaluate opportunities, structure the deal, and finance the investment. Contact our team for a confidential conversation about your investment plans.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
If you wish to explore a potential collaboration or present an investment opportunity, we invite you to contact us. We guarantee absolute confidentiality in all our conversations.