Business transfer: a guide for buyer and seller

A business transfer: one of the most complex transactions in business

Buying or selling a business is not like trading a car. It is a transaction involving legal, tax, financial and human dimensions, and mistakes can be costly.

Even so, there are many business transfers in Denmark every year, and a large part of them are handled by owners without much experience of the process. This guide gives you the full picture: from the first interest to signature and transfer.

Two types of business transfer

Before you start talking about price and terms, it is essential to understand what exactly is being transferred.

Asset deal

The buyer takes over specific assets from the seller: machines, stock, customer records, trademarks, leases and other contracts. The company as a legal entity does not come along; you buy the "content", not the "form".

Advantages for the buyer:

• You do not automatically take over the company's historical debt and obligations
• You can select the assets you want
• You can typically depreciate the acquired assets for tax purposes

Disadvantages for the buyer:

• Contracts and agreements typically have to be renegotiated, as they are tied to the seller's company, not the assets
• Customers and suppliers must be informed and accept a new contracting party

Advantages for the seller:

• Can sell selected assets without liquidating the company
• Can sell in stages

Disadvantages for the seller:

• Often less attractive for tax purposes than a share deal
• The company remains the seller's responsibility, including debt and obligations

Share deal

The buyer takes over the company as a whole; shares change owner. All the company's assets, liabilities, contracts and obligations come along.

Advantages for the seller:

• Often attractive for tax purposes if the shares are held through a holding company (see the tax section)
• Simple legal effect: everything transfers with the company

Disadvantages for the buyer:

• You take over historical obligations and potential hidden risks
• Requires thorough due diligence

For most smaller business transfers, the share deal is the preferred form.

The process step by step

Step 1: initial negotiation and NDA

Before you share confidential information about your business with potential buyers, you should secure a non-disclosure agreement (NDA). It protects you against the leakage of your customer list, pricing and strategy, and against a potential buyer, who may be a competitor, using the information to your detriment.

Step 2: Letter of Intent

When there is basic interest from both parties, a Letter of Intent (LOI) is typically issued, a mostly non-binding statement of intent that sets out:

• The expected price and payment structure
• The timeline for due diligence and the completion of the transaction
• Any exclusivity period (the buyer has the sole right to negotiate for, say, 60 days)
• What is binding (typically confidentiality and exclusivity) and what is not (typically the price)

Step 3: due diligence

Due diligence is the buyer's review of the seller's business and the most important phase for uncovering hidden risks.

Financial due diligence:

• Accounts for the last 3 to 5 years
• Cash flow and liquidity
• Outstanding debt and credit facilities
• Customer concentration (is a large part of the turnover from one customer?)

Legal due diligence:

• All contracts (customers, suppliers, employees, leases)
• Pending or threatened litigation
• Intellectual property (trademarks, patents, domain names)
• Company-law documents (articles, shareholders' agreement, general-meeting minutes)
• Compliance (GDPR, working environment, sector-specific requirements)

HR due diligence:

• Employee contracts and collective agreements
• Retention of key employees
• Pension and other obligations

Tax due diligence:

• Tax arrears and pending tax cases
• VAT matters
• Transfer pricing for international connections

Step 4: negotiation and transfer agreement

When due diligence is complete, the final transfer agreement is negotiated. The most important points:

Price and payment structure:

• Fixed price or earn-out (part of the price depends on future performance)?
• Cash or partly seller-financed?
• An escrow account as security for the warranties?

Representations and warranties: the seller declares that certain matters are true (for example that there is no pending litigation and that all taxes are paid). If a declaration turns out to be untrue, the buyer can claim compensation. Typically the scope of the warranties, the warranty period (often 1 to 3 years), a liability cap and a threshold for when claims can be made are negotiated.

Non-compete clause: the seller typically may not run a competing business for a period within the geographic area. A non-compete must be reasonable in time and scope.

The seller's involvement after the transfer: a transition period where the seller introduces the buyer to customers and employees and assists with knowledge transfer.

Step 5: closing

Signature and completion, which typically happen at the same time:

• The transfer agreement is signed
• The purchase price is paid or deposited in escrow
• The shares are transferred, and the change of ownership is registered where relevant
• The seller hands over keys, system access and so on

Pricing a business

There is no universal formula, but the most used methods are:

EBITDA multiple: the business's EBITDA (result before interest, tax and depreciation) is multiplied by a sector-typical multiple, which varies considerably from sector to sector.

Discounted cash flow (DCF): the future cash flows are discounted to present value. More precise, but dependent on valid forecasts.

Asset-based valuation: the sum of the assets' market value less the liabilities. Typically used when the business is not profitable.

Comparable transactions: what have similar businesses been sold for?

Always get an independent valuation from an accountant or M&A adviser before you set a price.

Tax on a business sale

Tax is decisive for what you actually earn from the sale.

Sale via a holding company: a gain on a holding company's sale of subsidiary shares is tax-free for the holding company when the holding company owns at least 10% of the subsidiary (subsidiary shares). There is no requirement of a particular holding period for the tax exemption. Be aware, however, of the special anti-avoidance rules for intermediate holding companies, which can lead to taxation in certain cases. This structure is often the most tax-efficient, and it typically requires that the holding structure is established in good time.

Personal sale: if you sell shares personally, the gain is taxed as share income. In 2026, the rate is 27% up to the progression threshold of DKK 79,400 and 42% on amounts above that. Spouses have a double progression threshold (DKK 158,800 in 2026).

Asset sale: a gain on the sale of assets (for example recaptured depreciation and goodwill) is taxed at the company as corporate income, or at a personally run business as business income, and is often more expensive than a share sale via a holding company.

Always discuss the timing and structure of the sale with your accountant before you start negotiations.

Business transfer and employees

The Business Transfer Act protects the employees: in a business transfer, the new owner automatically takes over the employees' employment relationships with the existing rights and obligations. This means, among other things, that the employees cannot be dismissed solely on the basis of the transfer, that the employment terms as a rule continue unchanged, and that the duties to inform and consult the employees must be met in good time.

The documents you will need

1. A non-disclosure agreement (NDA), from the start of the negotiations
2. A Letter of Intent, a mostly non-binding statement of intent
3. Due diligence material and a checklist
4. The transfer agreement, the main document with warranties and representations
5. Any transfer of the lease, if the business rents premises
6. Notice to customers and suppliers in an asset deal
7. Registration of the change of ownership where relevant

Conclusion

A business transfer is a complex transaction, where the choice between an asset deal and a share deal, thorough due diligence and a well-crafted transfer agreement are decisive. Tax can make up a large part of the financial result, so involve an accountant and a lawyer early in the process.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer and an accountant for advice on your specific situation.