Selling Your Company Is Good. Getting Paid Is Better!

• Transfer to a Notary Third-Party Account. Similar to real estate transactions, the notary acts as a guarantor of proper execution. However, using a notary is not mandatory for a share transfer and will incur additional costs. This payment method is therefore primarily used when a notary's involvement is required for other reasons (for example, registering a mortgage for the bank loan).

• Cash Payment. The era of paying with banknotes is over. Anti-money laundering regulations make any large-scale cash transaction impossible, which is for the best in terms of security.

• Bank Draft / Cashier's Check. This payment method is secure and convenient. Issued directly in the seller's name, the risk of theft is eliminated. Handing over the check also serves as the symbolic counterpart to the new shareholders signing the share register. Note that this refers specifically to a check issued or certified by a bank (cashier's check, certified bank draft). A standard personal check offers no security whatsoever.

• Wire Transfer. This straightforward payment method is becoming increasingly widespread. The parties will often execute the transaction together at the bank to obtain immediate proof of transfer. The bank granting the acquisition credit will favor this approach, as it can verify that all necessary transfer formalities are fully completed before releasing the funds.

• In practice, however, during difficult negotiations, a deferred payment can bring differing viewpoints together. Sellers often prefer making a concession on payment timing rather than on the sale price itself.

Key Tips When Negotiating a Deferred Payment

• Keep the deferred portion limited: It is not normal for the seller to act as the buyer's (sole) banker. A deferred portion of 10% to 25% is generally considered reasonable.

• Assess the buyer's financial standing: It can be useful to inquire into the buyer's overall financial strength. Financial repute can be confirmed by their banker and, where appropriate, supported by concrete evidence (bank statements, pay slips, property deeds).

• Formalize all terms in writing: It is essential to explicitly document the details of the deferred payment: exact amount, repayment schedule, applicable interest rate, penalties for late payment, etc.

• Depending on the outcome of negotiations, several deferred payment structures can be used:

• Classic Vendor Loan: Repayment terms are set in advance and are independent of the future performance of the acquired company. Just like a bank loan, the buyer may be required to provide collateral or guarantees (mortgages, personal guarantees, share pledges, etc.) to the seller.

• Earn-Out: In this structure, future payments are tied directly to the performance of the acquired business over a set period. Various financial metrics can be used, most commonly operational profitability targets (EBITDA). The advantage of this formula is that it aligns the interests of seller and buyer: the more the company prospers, the higher the final purchase price. This type of clause has become increasingly common since the banking crisis.

In conclusion, it is surprising to see how many business owners—otherwise well-versed in commercial negotiation—struggle to secure their payment when it comes to selling their own company. Vendor loans and earn-out clauses are powerful tools for closing a business transfer deal. However, they must be deployed within a coherent, structured, and balanced legal framework to avoid unpleasant surprises down the road.

• Illustration: Clou