When the time comes to leave a business behind or find a new owner to continue its operation, you might ask yourself: is it better to transfer or directly sell it? And of course, here comes the big question: what are the differences between these two options? We’ll explain them in detail with practical examples so you can make the best decision based on your needs.

Key concepts: What does it mean to transfer or sell a business?

What does transferring a business involve?

Transferring a business, in simple terms, is like "handing over" the use and operation of a commercial space or company, usually along with the necessary assets for its operation (such as furniture, equipment, licenses, etc.). In exchange, the person acquiring the transfer pays an agreed amount and then takes on the costs and responsibilities of continuing the business. The key point? In a transfer, the premises remain rented; you are not selling the property or all rights.

Definition of business sale: essential aspects

In a business sale, you are transferring complete ownership of the company to another person or entity. This includes the premises (if you own them), assets, contracts, and any other elements related to the business operation. It is a much more comprehensive transaction and usually involves a deeper change in the business structure.

Main differences between transferring and selling a business

Ownership and rights

The main difference is ownership. In a transfer, the buyer does not acquire the premises or full ownership of the business; in contrast, with a sale, the new owner gains absolute control. This also affects the type of contract you need to sign, as well as legal obligations.

Costs and initial investment

A transfer is usually more affordable in terms of initial investment since it does not include purchasing the property or the entire business structure. However, that does not mean it is cheap—transfers in prime locations can be very expensive. On the other hand, a full sale tends to be costlier but offers more long-term guarantees.

Employee and contract management

In a transfer, it is common for the new manager to inherit employees and labor contracts as they are. In a sale, everything is renegotiated from scratch, which can mean more freedom but also more responsibility for both parties.

Legal and tax obligations

In terms of taxes, selling a business is generally more complex, as it involves liquidations, ownership transfers, and in some cases, payment of capital gains tax or property transfer taxes. A transfer, while simpler, also has its tax requirements and requires clear agreements.

Benefits and drawbacks of transferring or selling a business

Advantages of transferring a business for both the seller and the buyer

Transferring has its strong points. For the seller, it is a quick way to obtain income and disengage from daily business operations. For the buyer, it is an opportunity to enter an already established market with lower initial costs. Additionally, by keeping the premises and operational assets, the transition is usually faster.

Disadvantages of transferring a business: critical points to consider

However, it’s not all positive. One of the biggest downsides is that as a seller, you do not transfer all responsibility; in some cases, you may remain linked to certain legal or contractual aspects. For the buyer, depending on a rental contract can create long-term uncertainty.

Pros and cons of directly selling a business

On the other hand, selling a business entirely offers greater clarity: the buyer gets everything with no strings attached. This can be a huge advantage but also increases risks. The costs are higher, and the negotiation process is usually longer and more complex.

Factors to consider when deciding between a transfer and a sale

Current financial situation and projections

Before deciding, it is essential to analyze the business’s current state. Is it generating profits? Does it have a stable cash flow? This can greatly influence the value you can obtain, whether through a transfer or a sale.

Short- and long-term goals

Your personal goals also matter. Are you looking for a quick and simple exit, or do you want to maximize the business’s value? If you’re in a hurry, a transfer might be the best option. If not, a full sale might be more beneficial.

Tax and fiscal implications

Tax impact is another key factor. Depending on your situation, a sale may generate higher taxes than a transfer. Consult with a tax advisor to avoid unpleasant surprises.

Employee and customer interests in the transition

Don’t forget to consider your employees and customers. How will the change affect them? A transfer is usually less disruptive, whereas a sale may involve more changes.

Procedures and necessary documentation for transferring or selling a business

Documents required to formalize a transfer

For a transfer, you will need a detailed contract specifying the included assets, rental conditions, and any agreements related to employees or suppliers.

Legal requirements for selling a business

In the case of a sale, the documentation is more complex: purchase agreements, property transfers, financial statements, and in some cases, full audits.

Tips to avoid legal issues during the transition

Whatever option you choose, make sure you have the right legal advice. A specialized lawyer can help you identify risks and ensure everything is in order.

Which option is better for you? Transfer vs. business sale

Assessing personal and business needs

The answer depends on your situation. What do you need most right now: time or money? If you want a quick transition, a transfer might be ideal. If you want to maximize the business’s value, consider a sale.

Tips for making an informed decision

Think carefully, analyze your options, and above all, don’t make rushed decisions. Talking to experts and considering different perspectives can make a big difference.

Frequently asked questions about business transfers and sales

What is the valuation process in each case?

In a transfer, valuation is usually based on the business’s assets and location. In a sale, additional factors like brand value and future income are also considered.

What taxes apply to a transfer vs. a sale?

Both options have specific taxes, ranging from VAT in a transfer to property transfer tax in a sale.

Can I keep the name and customer base in both options?

It depends on the agreement. In a transfer, the existing customer base is usually maintained, while in a sale, this can be negotiated. Everything should be discussed and clearly outlined in the contract.