Buying or Selling a Business in Cyprus

Share deal or asset deal: the first decision

In short

Shares transfer the company whole, liabilities included. Assets transfer what the contract lists.
Due diligence is not a formality. It is the pricing of risk.
Warranties and indemnities are where the price lives or dies.

Kleanthous & Platis acts for buyers and sellers of businesses in Cyprus: whole companies, controlling stakes, and the sale of a business's assets out of the company that owns them. The legal work has one purpose: that the price agreed in the meeting is the value actually delivered, in both directions.

The first decision shapes everything after it. A share sale transfers the company as it stands, history and liabilities included, which is why buyers investigate and sellers warrant. An asset sale transfers what the contract lists, which is why the list is the contract. Contracts, licences, employees and consents behave differently on each route, and the right choice is made deal by deal, with the tax advisers in the room.

Start before the heads of terms

The cheapest moment for legal input is before anything is signed, including the term sheet. Send us a line about the deal and we reply within one business day. Email office@kleanthousplatis.com or call +357 22 680 330.

Due diligence

The investigation that changes the price

The output is not a report for the shelf.

Corporate records and the cap table. Litigation, current and threatened. The key contracts and their change-of-control clauses, because the customer that made the business valuable may have the right to leave when it is sold. Property, employment, IP, licences, data. For sellers, the same exercise in advance, so surprises surface on your timetable, not the buyer's.

Every red item on the list becomes one of four things: a price adjustment, a warranty, an indemnity, or a condition of completion. That is the whole method. Nothing found is merely noted.

The SPA

The document the price actually lives in

Warranties, indemnities, and the mechanics of getting paid.

Conditions precedent and who bears the risk of them failing. Completion mechanics: what moves, in what order, on the day. Warranties, the seller's statements about the business, and indemnities, the seller's promise to cover specific named risks: two different instruments with different consequences, negotiated through caps, thresholds and time limits that are themselves the real bargaining. The disclosure letter, where the seller's knowledge meets the buyer's protection, and where more deals are truly negotiated than anywhere else.

Earn-outs, where part of the price depends on future performance, are drafted with their disputes in mind, because they are where buyer and seller keep doing business after trust has been spent.

Restrictive covenants on the seller: real, bounded, and enforceable, protecting what was bought without overreaching.

People and the deal

Employees in a business transfer

The workforce does not simply come with the keys.

Where a business changes hands as an asset deal, the law on transfers of undertakings, Law 104(I)/2000, does the moving itself: the employment contracts in force at the transfer date pass to the buyer automatically, with their accrued rights, and terms from collective agreements are preserved for at least a year. Both seller and buyer must inform the affected employees, in good time, of the date, the reasons, the consequences and any measures planned, and consult before measures are taken. The transfer itself is not a ground for dismissal, on either side of the deal; only genuine economic, technical or organisational reasons can justify one.

In a share deal the employer never changes, so none of this machinery is triggered, which is one of the places where the share-versus-asset choice bites hardest. Either way, it is priced and planned before signing, not discovered after completion.

After completion

The handover that protects the price

Completion is a milestone, not the end.

Registrations and notifications, the transition period, and the discipline of the warranty timeline: claims have contractual deadlines and notice requirements, and a buyer who discovers a problem must move by the contract's clock. When a warranty claim surfaces, on either side, it is a commercial dispute with a contract at its centre: see Commercial Disputes in Cyprus.

Common questions

How long does buying a business take?

A clean, well-prepared small transaction is measured in weeks; anything with property, licences, or consents from third parties is measured in months. The honest timetable is set by due diligence findings and third-party consents, and we state it early rather than optimistically.

Do I need accountants as well as lawyers?

Yes, and the work is better when the two run in parallel: the tax structure decides real money, and the financial due diligence feeds the legal protections. We work alongside your accountant as a matter of course.

The seller resists due diligence. Is that a red flag?

Resistance to reasonable requests is information. Sometimes it is disorganisation, which itself tells you about the records you are buying. The response is not to walk away by reflex but to convert the opacity into protection: wider warranties, specific indemnities, or price.

What happens to the employees?

It depends on the structure of the deal, and it is one of the first questions we answer in the specific transaction, because the obligations differ between a share sale and an asset sale and the planning has deadlines of its own.

Who leads this work

Between them the partners bring more than 40 years of practice in Cyprus. Every matter is run by one of them.

Andreas Kleanthous

Partner

Litigation, personal injury and insurance claims, debt recovery, administrative law, real estate, wills and probate.

Klitos Platis

Partner

Litigation, corporate and commercial matters, property and construction, including pleadings, interim applications and trial preparation.

Written on this subject

Directors' Duties Under Cyprus Law: What They Require in Practice

Corporate

Loan Restructuring in Cyprus: What Changes, and What It Costs

Banking

Cyprus as a Business Hub

Corporate

All our writing is on the writing index. Related: Litigation & Debt Recovery, Restructuring & Insolvency and Private Client.

Before instructing, send us the invoice, contract or loan documents and a short history of the debt. Kleanthous & Platis LLC, Nicosia. Telephone +357 22 680 330, office@kleanthousplatis.com or klitos@kleanthousplatis.com.

Request a consultation

Tell us briefly how we may assist

A few sentences is enough: which property, what stage the transaction has reached, and any date that matters. We reply within one business day. Please do not send confidential documents until we confirm we can act.

Request a consultation

Or write to us directly at office@kleanthousplatis.com, or call +357 22 680 330.