Selling a bank: how to prepare the documentation for potential buyers

Selling a bank during a period of calm and prosperity and even economic turbulence is not an easy and multi-stage matter, since fewer and fewer people see opportunities in our time. The traditional view of selling a banking business implies that the owner of a business project has significantly less chance of achieving the target result without consulting with experts, advisors, professional brokers or investment companies. Below we will consider significant aspects of the sale of a bank and the preparation of documentation for presentation to potential buyers.

Our team is highly qualified experts in the field of acquisition and sale of businesses. We have many offers of ready-made banks for sale in Switzerland and other countries. Our lawyers will become your reliable allies on the path to realizing your commercial ideas.

Importance of Commercial Offer in Bank Sales: Essentials of Bank Sale Documentation and Components Required for Potential Buyers

Before selling, the bank needs to properly prepare before entering the market with an offer; By doing exactly this and going through the preparation stage, you will dramatically increase the likelihood of a deal while getting a decent and fair price for your business. If entering the market is premature, you will not only receive many refusals from investors with various reasons not to buy your bank, but you will also face the risk of failure of the deal in the future.

1. Prepare the latest bank sale financial statements (it is better to sell the bank on the eve or shortly after the end of the financial year).
2. Get lease agreements, contracts and legal documentation in order (the main reason for deal failure is problems with passing a comprehensive legal audit).
3. Resolve legal disputes with counterparties and disagreements with employees.
4. Minimize cash flows to maximize cash flow auditability.
5. Reduce the dependence of the business on the owner and increase the scope and weight of responsibility of hired management.
6. Work with professional advisors to discuss favorable tax treatment for the deal and conduct bank sale financial analysis.
7. Don’t forget about marketing strategies when selling your banking business.

So, in order to sell a bank quickly and profitably, and implement bank sale presentation successfully, it is important to clearly explain to the buyer how the company works and talk in detail about profits and profitability. To do this, it is worth collecting financial reports, describing assets and key business processes. For small and medium-sized banking businesses, you can take data for at least the last year and, based on it, generate accounting and financial accounting documents.

Bank Sale Preparation: Steps to Compile Accurate Documentation

When preparing the necessary documentation for bank sale offer, special attention must be paid to drawing up the contract. Typically, a company’s installment purchase agreement will include:

• information about the object of the contract, i.e. about the yuan (if a share is being sold – information about its owner, amount and payment procedure);
• business price;
• schedule of payments (tranches) that the buyer undertakes to make in favor of the seller;
• details of the seller’s bank account into which funds from the buyer should be received;
• condition on the need to indicate the details of the business purchase and sale agreement in the purpose of payments;
• the procedure and consequences of the buyer depositing funds with the notary in the event of the seller’s bank accounts being inoperable;
• a list of property used in business and registered in the name of the company being sold;
• assurances from the seller about the proper registration of business assets, about the absence of debts, encumbrances and claims of third parties on the company, about the presence of the notarial consent of the spouse to sell the share (if the share is the common property of the spouses), etc.

The final document in banks sale scheme is the option to conclude an agreement, provided for by certain legislative articles. An option is an agreement that allows you to unilaterally, with the help of a notary, quickly implement the transfer (alienation, acquisition) of a stake in a company upon the occurrence of the conditions that the parties to the option have provided for.

The decision to implement Europe Bank sale or in other market-spaces is a serious step; the process usually lasts from six months to a year if you want to conclude a deal yourself and not resort to a ready-made offer or the help of experts. If you decide to make a deal, start preparing in advance. Think about how your company will appear to potential buyers.

1. Plan your exit strategy. An entrepreneur needs to decide several important questions, namely, do you intend to sell the business and retire completely, or do you want to merge and retain the opportunity to participate in decision-making.
2. Get all your documents in order. When selling a bank, it is advisable to conduct a full audit of the last few years and prepare bank sale financial reporting. You will have the opportunity to show the history of the development of your banking business to potential buyers. It is also necessary to ensure that all taxes are paid and all legal disputes are settled.
3. The deal may also include your established customer base, audience loyalty to the brand, intellectual property rights, licenses and issued patents. All this is valuable in the eyes of a potential buyer and you need to decide what exactly will be transferred during the transaction.
4. Most often, entrepreneurs turn to expert appraisers to assess the value of a company. A professional business valuation will be viewed more favorably by potential buyers and may prevent legal troubles in the future. At the same time, you can independently monitor the market, economic trends, see if similar companies have been sold recently and what prices they set.

A good strategy is to develop and loudly announce the company using all available methods. In this case, a large enterprise that lacks a similar product may hear about the business. Then the founder will have more flexibility in negotiations. The buyer will realize that he is saving himself several months or even years of development.

To objectively evaluate your business before selling, you need to properly register your assets. If there is real estate, patents and other property, all this should be registered with your business in order to increase its capitalization. It all depends on the size of the business. If it is small or medium-sized, then trusted persons and friends may be enough. If this is a large company with aspirations to enter international markets, then it is better to contact our professionals.

Our lawyers will become reliable allies on the path of your commercial development. We will accompany you at every stage of the transaction and guarantee you maximum success. Contact us now and secure your future.

Article’s author is Denys Chernyshov – founder and CEO of the globally-famous organization Eternity Law International.