The Process of Selling a Company in Colombia:

Step-by-Step Guide to a Successful Business Sale Transaction in Colombia

Make sure you develop a process

Selling a company is a complex journey, filled with critical stages that require careful planning and execution. For entrepreneurs in Colombia, understanding this process is the first step towards a successful transaction and realizing the value built over years of effort. Below, we break down the key phases of selling a company.

Phase 1: Preparation and Strategy (Before Going to Market)

• Decision and Goal Alignment: Clearly define why you want to sell and what your financial and personal goals are.

• Preliminary Valuation: Obtain a professional valuation of your company. This will set realistic expectations and serve as a basis for negotiations.    

• Internal Organization: Get your finances, legal aspects, contracts, and operations in order. Prepare a "data room" (virtual or physical) with all relevant documentation.    

• Advisor Selection: Hire an investment bank with M&A experience in Colombia.  You will also need legal and tax advisors.   

Phase 2: Marketing and Buyer Search

• Preparation of Marketing Materials: A Confidential Information Memorandum (CIM or "teaser") is prepared, describing the company and its opportunities attractively but realistically.    

• Identification of Potential Buyers: Your advisors will identify and contact strategic buyers (companies in the sector) and financial buyers (investment funds) who may be interested.

• Non-Disclosure Agreements (NDAs): Before sharing sensitive information, interested parties sign an NDA.

Phase 3: Negotiation and Letters of Intent

• Presentations and Meetings: Presentations are made to interested buyers, and their questions are answered.

• Receipt of Non-Binding Offers (Letters of Intent - LOI): Buyers submit preliminary offers indicating the offered price, transaction structure, and other key conditions.    

• Selection of the Best Offer: LOIs are analyzed, and the buyer (or buyers) with whom to proceed to the next stage is selected. The terms of the LOI are negotiated.

Phase 4: Due Diligence

• Exhaustive Review: The selected buyer and their advisors conduct an in-depth investigation of all aspects of your company: financial, legal, operational, commercial, labor, etc.  This is where the preparation from Phase 1 pays off.   

• Data Room Access: Access to information is provided in an organized manner.

• Q&A Sessions: Buyer's information requests are addressed.

Phase 5: Negotiation of Definitive Agreement and Closing

• Negotiation of the Share Purchase Agreement (SPA): Once due diligence is satisfactorily completed, the final terms and conditions of the share or asset purchase agreement are negotiated.  This is a complex legal document detailing all parties' obligations.   

• Obtaining Approvals: If necessary, regulatory or third-party approvals are managed.

• Closing the Transaction: Final documents are signed, payment is made, and ownership of the company is transferred.

Phase 6: Post-Closing (Integration or Transition)

• Integration: If the buyer is strategic, the process of integrating your company into their existing structure will begin.

• Transition: It is common for the seller to remain for a transition period to ensure a smooth handover of the business.

The process of selling a company in Colombia is a marathon., not a sprint. Each stage has its own challenges and requires a meticulous approach. Having the support of an experienced investment bank will not only help you navigate this complexity but also maximize value and ensure your interests are protected every step of the way in the dynamic Colombian market.

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