Selling a going concern is not the same as liquidating a business or transferring a commercial lease. It's an M&A process in which an active company is transferred, with live customers, revenue, and operations — and that's precisely why it's worth more than the sum of its assets.
In this guide, we explain exactly what counts as a going concern, how it's valued under the going concern principle, how it differs from an asset sale or a lease transfer, what types of buyers look for one, and what the stages of the sale process are.
What is a going concern?
A going concern is a company that is still carrying on its business activity normally at the time of the sale: it has active customers, recurring revenue, employees on the payroll, and ongoing operations. When it's transferred, what changes is the ownership — not the activity, which continues under the buyer.
In accounting and M&A, this concept is known as the going concern principle (an ongoing business). It means the valuation assumes the company will continue operating indefinitely after the sale, which has direct implications for the price: a going concern is worth more than the sum of its individual assets, because it includes the value of the business itself (customers, contracts, brand, team, know-how).
Important clarification. “Going concern” doesn't mean profitable. It means operational. A company can be a going concern and have losses, debt, or problems — and still be sold in this format. The opposite would be a company in liquidation, where activity has already ceased.
How much is a going concern worth?
The valuation of a going concern is based on its ability to generate future profits, not on the book value of its assets. The most widely used methods are:
1. EBITDA multiples. This is the most common method in the Spanish mid-market. A sector multiple (typically between 4x and 8x EBITDA, depending on the sector and size) is applied to the company's normalized operating profit. Find out more in our post on EBITDA multiples.
2. Discounted cash flow (DCF). This projects the company's future cash flows and discounts them to present value. It's more technical and is typically used in large deals or in sectors with high variability.
3. Transaction comparables. This looks at the prices at which similar companies in the same sector and of the same size have recently been sold.
The differentiating factor compared with an asset sale is goodwill (goodwill): the premium paid for the brand, the customer base, existing contracts, the team, and the know-how. In a going concern, goodwill can represent a very significant share of the total price — sometimes more than the tangible assets.
How a going concern is sold: the M&A process
Selling a going concern follows a structured M&A process.
Each step has its own complexity, but there are three principles that set a well-run process apart:
- Confidentiality from day one. The teaser is shared anonymously, and the company's identity is revealed only after the NDA is signed.
- A professional process. A well-prepared information memorandum and an organized data room are signs of seriousness that institutional buyers reward with better offers.
- Competitive negotiation. Having several potential buyers in parallel (a competitive process) is what makes it possible to maximize price and terms.
The full process usually takes between 6 and 12 months, depending on the size of the company, the complexity of the sector, and the quality of the initial information.
Who buys going concerns?
Knowing the buyer profile is key to preparing the deal properly. In the Spanish market, there are 5 main types of active buyers: strategic buyers (industry players), private equity firms, family offices, management teams (MBO), and search funds.
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