How to buy a company: the acquisition process and targets

Growing by building every new business line, plant or client portfolio from scratch can take years. That is why, when an established industrial company wants to move faster, one of the most powerful levers is to buy a company: taking on production capacity, technology, talent or market share in one step, when developing it would otherwise take a decade. This is what is known as inorganic growth, and it drives a large share of the deals in the mergers and acquisitions (M&A) market in Spain, which in 2025 recorded 3,336 transactions worth an aggregate €103,085 million (TTR Data, 2025). Buying a company, however, is not like buying any other asset: it is a long, technical process full of risk that destroys value instead of creating it when it is badly executed. This guide walks through the company acquisition process step by step, from setting the strategy to completion and integration.

Why buy a company instead of growing organically?

Buying a company almost always answers a specific strategic logic rather than whatever opportunity happens to appear. The most common motives among Spanish SMEs and mid-sized companies are:

• Winning market share by absorbing a direct competitor and consolidating a fragmented sector (a build-up strategy).
• Gaining access to new technology, patents or know-how that would be expensive or slow to develop in-house.
• Vertical integration: taking on a supplier or a distribution channel in order to control the value chain and improve margins.
• Geographic expansion into new domestic or international markets behind a brand that is already established.
• Bringing in talent and whole teams (what the technology sector calls an acqui-hire).

The difference against organic growth is time and certainty. Building from scratch means learning, mistakes and a long run-up; a well-chosen acquisition delivers results that are already running. In exchange, it concentrates the risk in a single moment, the deal itself, and it forces an integration afterwards, which is where the value of the purchase is won or lost.

Considering growth through acquisitions? At Tecnocim Innova we support buyers across the whole process, from setting the investment thesis to completion. Take a look at our service for buyer and target searches in M&A deals.

What are the stages of a company acquisition process?

A professional deal follows an ordered sequence. Skipping stages or rushing them is the most frequent cause of failed transactions. These are the stages of the acquisition process seen from the buyer's side (buy-side):

1. Setting the strategy and the investment thesis. Before looking at specific companies you have to answer one question: what problem does this purchase solve? This is where you define the ideal target profile, covering sector, size (revenue, EBITDA), location and technology profile, along with the available budget and the criteria for ruling candidates out.

2. Searching for and identifying targets. You draw up a long list of candidates that fit the criteria, filter it down to a short list and make a discreet first approach to the owners.

3. First contact and initial valuation. After a non-disclosure agreement (NDA) is signed, the seller shares preliminary information (the information memorandum, or info memo) that allows an indicative valuation.

4. Letter of intent (LOI). This is the document, usually non-binding except in specific clauses, setting out the indicative price, the structure of the deal and exclusivity to negotiate.

5. Due diligence. The in-depth review of the target across every dimension (we set it out below).

6. Negotiating the sale and purchase agreement (SPA). The agreement is turned into a binding contract with its warranties, conditions and price adjustment mechanisms.

7. Completion (closing) and integration. Signing before a notary, payment and then the post-acquisition integration plan, which is where the value really materialises.

How is a target search carried out?

The target search is the stage that most clearly separates an opportunistic acquisition from a strategic deal. The point is not to buy whatever happens to be for sale, but to identify the company that best fits the investment thesis, whether or not it is formally on the market.

The process starts with a map of the sector: competitors, suppliers, adjacent businesses and companies holding the technology or the clients you are after. From there you build a long list that may run to dozens of candidates, and you apply objective filters such as size, profitability, cultural fit and financial position until you reach a short list of priority targets.

A large part of what an M&A adviser adds at this stage is access to so-called off-market deals: companies that are not publicly for sale but whose owners might listen to an offer. These deals usually involve less competition from other buyers and therefore better terms. The first contact has to be discreet and professional: a badly handled approach can close the door for good.

Want to identify the best target companies in your sector? Our M&A team combines market intelligence with a network of contacts to find targets that fit your strategy. See how we work in M&A and business transfers.

How much is the company you want to buy worth?

Before making an offer you need a solid idea of what the target is worth. A business valuation is not a single number but a range that depends on the method used and the assumptions behind it.

Among Spanish SMEs and mid-sized companies, the most widespread approach is EBITDA multiples: recurring operating profit is multiplied by a reference multiple for the sector. According to the NIMBO valuation guide (2026), a significant share of SMEs with revenue below €20 million trade at multiples of between 4x and 10x EBITDA, depending on the sector, the size and the quality of the business. Alongside this method, buyers use discounted cash flow (DCF), which projects future cash generation, and net asset value, based on the balance sheet.

As a buyer, the aim is not only to know the fair price but to understand where every euro of that value comes from: how much depends on a handful of clients, what share of EBITDA is recurring and how much of the value sits with the founder (so-called key person risk). To go deeper into the methods, read our guide on what my company is worth and the valuation methods.

What does the buyer's due diligence review?

Due diligence is the audit the buyer runs on the target before completing the deal. Its purpose is threefold: to confirm that the information provided is real, to identify hidden risks and to gather arguments for adjusting the price or the warranties in the contract. Rigorous due diligence covers at least these areas:

Due diligence findings do not always break a deal: they often translate into a price adjustment, into specific warranties (reps & warranties) or into part of the payment being held back (escrow) until certain risks fall away. If you want to understand how this review is structured, read our guide on what due diligence is and how to prepare for it.

How is the purchase of a company financed?

Few acquisitions are paid for entirely out of the buyer's own cash. The financing structure shapes the return on the deal and the level of risk taken on. The most common instruments are usually combined:

• Equity. The buyer's own cash contribution, which sets how much risk is carried directly.
• Acquisition debt. Bank financing secured against the assets or the cash flows of the acquired business itself; in its most leveraged form this is known as a Leveraged Buyout (LBO).
• Deferred payment (vendor finance). Part of the price is deferred and financed by the seller, which aligns their interests with the continuity of the business.
• Earn-out. A portion of the price is tied to meeting future targets (sales, EBITDA), reducing the buyer's risk and keeping the seller involved through the transition.

Choosing the structure is not a purely financial decision: a well-designed earn-out or deferred payment protects the buyer against surprises after completion, and it usually makes agreement easier when buyer and seller disagree about the future value of the business.

From agreement to completion: LOI, SPA and integration

Once due diligence is over, the deal enters its final stretch. The letter of intent (LOI) sets the framework, covering indicative price, structure and exclusivity, and it is usually non-binding except on points such as confidentiality. From there, lawyers on both sides negotiate the sale and purchase agreement (SPA, Share Purchase Agreement), which is binding and includes the seller's representations and warranties, the conditions precedent, the price adjustment mechanisms and the indemnity regime.

Completion (closing) is the signing before a notary, the payment and the effective transfer of the shares. But the deal does not end there: the real challenge begins the day after. Post-acquisition integration, of teams, systems, clients and culture, is where the value of the purchase is won or lost. A technically flawless acquisition can still fail if integration is neglected.

Frequently asked questions about buying a company

How long does it take to buy a company? A full deal, from the search to completion, usually runs from six months to more than a year, depending on the complexity of the target, the due diligence and the negotiation. Off-market deals, with no competitive process, can move to different timescales than organised auctions.

Is it better to buy the shares or the assets of the company? Buying the shares or quotas (share deal) transfers the whole company, with all its contracts and also its contingencies. Buying the assets (asset deal) lets you pick what you acquire and leave certain liabilities out, but it is harder to put in place. The choice depends on the tax position, the risks identified and the structure of the business.

What role does an M&A adviser play on the buy side? A buy-side adviser helps define the investment thesis, finds targets (including off-market ones), runs the valuation, coordinates due diligence and negotiates the terms. Their value lies in access, objectivity and the experience to avoid mistakes a one-off buyer does not spot.

What is due diligence and why is it essential? It is the exhaustive review of the target before completion, confirming that the information is true, uncovering hidden risks and providing arguments for the negotiation. Buying without due diligence is like signing a blank cheque.

Can you buy a company without having all the money? Yes. Most acquisitions combine equity with bank debt, deferred payment to the seller and earn-outs. A good financing structure allows deals above the cash available, provided the acquired business generates enough cash flow to carry the debt.

How does buying a company differ from selling one? The buyer looks for strategic fit, risk mitigation and a reasonable price; the seller looks to maximise value and the certainty of being paid. They are mirror processes: if you are on the other side, read our guide on how to sell a company in Spain.

Conclusion: buying well starts with the strategy

Buying a company is one of the most transformative decisions a business can take, and also one of the riskiest. The difference between an acquisition that multiplies value and one that destroys it is rarely the price: it lies in the quality of the investment thesis, in a rigorous search for the right target, in due diligence without shortcuts and in a well-planned integration. Each of these stages calls for technical judgement and experience.

At Tecnocim Innova we support buyers across the full acquisition cycle, from setting the strategy to completion and integration. If you are weighing up inorganic growth in Spain, let us talk: we will help you find the right targets and structure the deal safely.