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    Tenerife Business » Useful Information » Buying a Business in Tenerife » 7 Steps to buying a Business in Tenerife
Updated: 04-06-2010

7 Steps to Buying a Business in Tenerife

1. Find your Tenerife Business Sales Agent

Almost all businesses for sale in Tenerife are sold through agents, but the key is to choose the right one. A good agent will be one of your best sources for information and advice so it’s worth taking some time before you start viewings to talk on the phone and email while you choose who to work with. Frina Tenerife can offer you a wide range of services  and advice to suit your individual needs


2. Choose your business

Having narrowed down your choice, don’t get too excited! Take a calm approach and assess the Tenerife business for sale with the help of your agent and your common sense. A good agent will get the information you need from the vendor, such as the status of licenses, lease contract terms, contact with the landlord and the financial performance of the business. Use your agent to get this information for you or else you will be waiting a long time!

 

3. Negotiate the price

A good agent will make sure your interests are best protected in this process and will act as a useful buffer and insight into this part of the process. If you need a mortgage, now is the time to start the process.

 

4. Appoint a lawyer

A lawyer or gestor will represent your interests. They will perform full business checks and ensure the business/property is transferred free of debts, charges and legal obligations. This is the start of the conveyance process. If you don’t have your own lawyer or gestor your agent will be able to make recommendations based on past experiences.

 

5. Sign the Purchase and sale contract

This is prepared by your lawyer, and when you sign you will lodge 10% of the purchase price as a deposit. This will secure your business and the vendor will then take it off the market. Alternatively a simple option or reservation contract can be prepared by your agent at this stage – this will confirm the intentions of both parties and regulate the deposit terms. Final contracts will be prepared by the lawyer.
Deposit is not refundable unless under certain circumstances such as if the vendor breaches the contract and sells the business to someone else. In this case, the vendor will be legally obliged to refund double the amount of deposit to you. If your lawyer’s searches establish that the business is materially different to what was described and advertised, then you can claim your deposit back and terminate the process. A detailed inventory should be the part of the contract. Normally your agent together with the vendor will prepare this. You should also agree the level of stock at the day of handover. Deposits are normally held by the lawyer or agent. In some rare cases a vendor may insist on holding the deposit, but this is to be avoided if at all possible.

 

6. Conveyancing

Having completed the searches, your lawyer will prepare the paperwork required to transfer the business / property into your name. The lawyer will collect receipts of payments, licenses, permits, electricity bulletins, etc and ensure outstanding bills are paid and the business/property is transferred free of any debts. Any additional licenses to be applied for as well as mortgage information, new lease contracts and suchlike will require your signature. This process takes 2-4 weeks.

 

7. Completion

This is a meeting where the business, licenses, mortgage etc are transferred into your name and you will pay the balance due of the purchase price. If there is a property freehold involved, then this must take place in a Notary’s office. If there is no property involved, then a Notary is still an option, but most buyers prefer to avoid the additional cost. At the end of this meeting you will receive the keys to your new business and you are ready to start trading!
 

By FRINA Tenerife


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