Business Transfers

There are plenty of good business opportunities in Spain. Choosing the right business will be one of the most important decisions you ever make. It is essential that you know what you want to do before you start looking. You will need to have a clear idea of the area in which you intend to operate. Make sure whatever you intend to do is suitable for the area in which you propose to operate.

Choosing an FBEAS agent

It may seem tempting to buy privately, but in every circumstance we would recommend the use of an FBEAS agent, who can be extremely useful to the purchaser. Your FBEAS agent will be bound by a strict Code of Practice so you can be sure of honest professional service.

Your FBEAS agent is in a position to offer the potential purchaser a wide choice of businesses and can often provide “The Perfect Solution”. If he does not directly have the clients requirements, he will be able to “Network” with other FBEAS agents through the FBEAS Property and Business Network.
Please remember, your FBEAS agent will not charge you for his services, his fees being paid as a commission by the vendor.

Types of business

As in the U.K. there are different methods of purchasing a business, for example :

1). FREEHOLD - Identical to the U.K. Where the purchaser buys the premises where the business is located.
2) TRASPASSO - Until recently this was the most prevalent type of lease, usually for an indefinite period. It normally consists of a perpetual rental contract and the owner of the TRASPASO has the right to sell on the lease to a third party. The purchase price would normally include the fixtures, fittings and goodwill. The law governing this type of lease has changed and as a consequence TRASPASOS are becoming a thing of the past.
3). FINITE LEASES - Similar to the U.K. Much more common in Spain now. Leases can be for any length of time i.e. 2, 5, 10, 15, 20 years etc. With or without a renewal clause.
4). RENTAL CONTRACT - Very occasionally available. A financial bond is normally required, which may or may not be refundable. Monthly rent pro rata is normally higher than other types of lease.
5). S.A. Companies – Similar to PLC company in U.K.
S.L. Companies – Similar to Ltd company in U.K.
S.C. Companies – Similar to partnership in U.K.

Buyer Beware

Please remember, if you intend to purchase an existing business with premises and you are not fortunate enough to be buying the freehold, you will be purchasing a lease, plus an amount for fixtures, fittings and goodwill. Subsequently you will be renting the premises from a landlord, who will require a deposit. There are several crucial points you need to check before paying over any monies.

Your FBEAS agent will be able to carry out these checks in conjunction with your solicitor. The salient points are:

• Opening Licence – This is the licence issued by the local authority for the business to operate. Make sure your agent sees it and gets a copy. It should be on display in the premises for sale. If the actual licence or a copy cannot be provided then it is doubtful that the business can operate legally. Of course you could agree to purchase the business without an opening licence, but make sure you have assessed the risks and costs involved before proceeding.
  
• Rental contract - Your FBEAS agent will get a copy of the rental contract being offered and check and advise you of the following points:
  
  
• Confirm who is the owner of the property
• The duration of the contract
• The amount of rent payable
• The amount of security deposit
• Whether it is renewable and under what circumstances
• Who is responsible for repairs and wear and tear.
• Rights of disposal and the landlord’s participation.
• Rent reviews
• Responsibility for payment of taxes and charges
• Finances – Make sure you have calculated the finances correctly. There will be additional costs for:
• Security deposit
• Advance rental (Usually 1 month)
• Legal fees
• Transfer of opening licence
• Gestor (accountants fees)
• Social security payments
• Stock

Business Plan - Try to predict every expense you can and work out the monthly outgoings. Obtain this figure for cost of sales and then work out how many sales you require to cover the outgoings every month. You can then decide whether this level of sales to be achieved is realistic. Making early contact with an accountant could prove to be very useful as they will have an idea of what can or cannot be realistically achieved for your chosen business from past experience. Make the plan and make sure you stick to it. The business you buy must support your needs.

Note – For the purpose of definition, where appropriate the words he/him/himself also indicate she/her/herself