Buying a Company in Austria: Process, Checks and Buyer Liability

A company acquisition runs through five phases: defining the target and making contact, confidentiality and first documents, a letter of intent setting the price range, due diligence, and finally the purchase agreement and closing. Anyone buying an Austrian GmbH (a private limited company) needs a Notariatsakt (an Austrian notarial deed) to transfer the shares; anyone taking over a business as an asset deal inherits contracts, employees and part of the historic liabilities by operation of law — whether or not the agreement says so.

For buyers, our approach to buying a company sets out how we source, assess and execute acquisitions.

The process seen from the buyer's side

This article sets out which steps make sense in which order, which formal requirements are not negotiable, and which liabilities travel with the business. The same sequence from the seller's perspective is described in the process of selling a company. The order of events is identical, the interests run in opposite directions — which is precisely why it pays to understand the other side.

Phase 1: a search profile rather than opportunism

Most failed acquisitions do not fail in due diligence. They fail before the first conversation, because the buyer has no search profile and therefore looks at everything that is put in front of him. A robust profile fixes four things: sector and business model, size (revenue, earnings, headcount), region, and the role you intend to take after completion — running the business yourself, or holding a stake alongside existing management.

That last point matters more than all the others. A company whose owner personally holds every customer relationship carries a very different risk for a buyer without sector experience than it does for a competitor. Where target companies are actually to be found — marketplaces, advisers, direct approach — is covered in the overview of companies for sale.

Phase 2: confidentiality, teaser, documents

Serious sale processes release figures only once a confidentiality agreement has been signed. As a buyer you first receive an anonymised short profile, then — after the NDA — the information memorandum with the business model, the last few years of figures and the forecast.

What this phase demands of you is a rough valuation on incomplete data. The usual mistakes: taking the seller's forecast as given, and failing to charge for a market-rate owner's salary. If the owner has paid himself below market level, the reported earnings are overstated — after completion you will have to fund a managing director. How these adjustments work is explained in what is my company worth.

Phase 3: the letter of intent — a price range before you spend money

The letter of intent is the point at which a buyer first names a number, and also the point at which he secures exclusivity. The two belong together: due diligence costs advisory fees, and you only incur them if the seller is not negotiating in parallel with others during that period.

A usable LOI contains a price range together with the assumptions it rests on, the intended transaction structure, the timetable, the exclusivity period and the circumstances in which you can walk away. What it should not contain is a fixed price agreed before any examination — every later reduction then looks like tactical renegotiation rather than a finding.

Phase 4: due diligence — and what buyers systematically miss

Due diligence covers finance, legal, tax, people and operations. For buyers of niche businesses, four areas account disproportionately often for price reductions in practice.

Customer concentration. Where a single customer accounts for a substantial share of revenue, you are not buying a company, you are buying a customer relationship — examine contract terms and termination rights, not just revenue shares.

Change-of-control clauses. Lease, supply and credit agreements may carry a special right of termination on a change of ownership. This matters particularly in a share deal, because the company formally stays the same and these clauses are the counterparty's only lever.

Dependence on the owner. Professional licences, technical knowledge, price negotiations — the more of this sits with one person, the longer the handover period has to be secured contractually.

Employment law and historic entitlements. Accrued holiday, severance entitlements from prior service and collective agreement gradings all travel with the business. The Wirtschaftskammer (the Austrian Federal Economic Chamber) expressly points out that acquirers should examine these positions before completion.

Phase 5: asset deal or share deal — the decision with the largest consequences

In a share deal you acquire the company with everything inside it: contracts, permits, employees, but also unknown liabilities and historic tax exposure. In an asset deal you buy individual assets and can in principle leave liabilities behind — but contracts and permits then have to be renegotiated or transferred.

Buyers tend to prefer the asset deal; sellers in Austria usually prefer the share deal, because the disposal of shares is treated differently for tax purposes than the sale of individual assets. A comparison of both structures including the tax consequences is set out in asset deal or share deal, and the Austrian specifics in asset deals in Austria.

One point for expectation management: the structure is part of the price. A buyer who insists on an asset deal usually pays for it — and the reverse holds too.

Formal requirements in Austria: Notariatsakt and Firmenbuch

The transfer of GmbH shares between living persons requires a Notariatsakt in Austria (§ 76 Abs. 2 GmbHG, the Austrian Limited Liability Companies Act). The same form applies to any agreement under which a shareholder undertakes to transfer shares in the future — an option or preliminary agreement by email is therefore ineffective. The articles of association may impose further conditions, in particular the consent of the company. Pledging a share, by contrast, does not require a Notariatsakt.

After the notarial deed, the change of shareholder is filed with the Firmenbuch (the Austrian companies register). The practical consequence for the timetable: the notary appointment, the consents and, where relevant, bank releases all have to be coordinated onto a single day. The detailed sequence is set out in Notariatsakt and Firmenbuch and in selling a company in Austria.

The liability you acquire by law as a buyer

When a company or business is acquired in Austria, several liability provisions apply irrespective of what the purchase agreement says.

Contractual relationships and liabilities (§ 38 UGB, the Austrian Business Code). On a transfer of a business, the acquirer assumes the business-related, non-personal legal relationships of the transferor together with the rights and liabilities attaching to them, unless otherwise agreed. Contractual counterparties and providers of security may object to the transfer within three months of being notified. An exclusion of liability agreed between buyer and seller has effect against third parties only if it has been entered in the Firmenbuch, published, or notified to the third party.

Debts you knew of or ought to have known of (§ 1409 ABGB, the Austrian Civil Code). A person taking over assets or a business is directly liable to creditors for debts he knew of or ought to have known of at the time of the handover — capped at the value of the assets taken over. Where the transferor is a close relative, the burden of proof is reversed. Arrangements between seller and buyer to the detriment of creditors have no effect.

Taxes and duties (§ 14 BAO, the Austrian Federal Fiscal Code). The acquirer is liable for business-related taxes and for withholding amounts due from the beginning of the last calendar year preceding the transfer of title — but only to the extent that he knew or ought to have known of those debts, and capped at the value of the assets and rights transferred. This liability does not apply to acquisitions in enforcement or insolvency proceedings.

Employment relationships. On a transfer of business, the acquirer steps into the existing employment relationships as employer. Prior service and remuneration remain in place, dismissal on the grounds of the transfer is not permitted, and both sides have information obligations towards those affected. What follows from this in practice is set out in transfer of business and employees.

The flip side for the seller: his liability for the business-related liabilities taken over is limited to those falling due within five years of the transfer (§ 39 UGB). A buyer who discovers a legacy problem after that period stands alone — which is why warranties, indemnities and their limitation periods are the real subject of negotiation. What belongs in the company purchase agreement is described there in detail.

Real estate transfer tax on share purchases: a new threshold since 1 July 2025

Where the target company owns real property, even a share purchase can trigger Grunderwerbsteuer (Austrian real estate transfer tax). The Budgetbegleitgesetz 2025 (the 2025 budget accompanying act) lowered the relevant shareholding threshold from 95 to 75 per cent with effect from 1 July 2025, and extended the observation period for transfers that are aggregated from five to seven years. Corporations and indirect shifts in shareholdings are now caught as well; economically connected acquirers are aggregated as a group, which removes the splitting of shareholdings as a structuring option.

The rate depends on whether the company qualifies as a real estate company — that is, whether its focus lies in the disposal, letting or management of property: if so, 3.5 per cent of the fair market value, otherwise 0.5 per cent of the property value. For buyers of manufacturing or service businesses that own their own operating premises, this means the structure has to be modelled for tax before the LOI, not after it.

From headline price to the amount actually transferred

The enterprise value that is negotiated is not the amount that moves. Net debt is deducted, an adjustment is made for working capital, and part of the price often remains outstanding as a holdback or an earn-out. How this mechanism works is set out in net debt and purchase price mechanics.

For buyers, the purchase price mechanism is at the same time the central financing question: what has to be paid on the closing date determines the bank structure. Which building blocks are available — equity, bank debt, an aws (Austria Wirtschaftsservice) guarantee, a vendor loan — is covered in financing a company acquisition.

Timetable: what buyers should realistically expect

From the first qualified contact to closing, the market norm is six to twelve months; in structured processes with a well-prepared seller, three to six months is achievable. Time is rarely lost in the negotiation itself. It goes on waiting for documents, on the financing commitment, and on third-party consents — co-shareholders, landlords, banks. Addressing those three points early shortens the process more than any negotiating tactic. More on this in how long a company sale takes.

FAQ

How does a company acquisition work?

In five phases: search profile and approach, a confidentiality agreement with the first documents, a letter of intent with a price range and exclusivity, due diligence, and finally the purchase agreement and closing. With an Austrian GmbH, closing includes the Notariatsakt transferring the shares and the filing with the Firmenbuch.

Is an asset deal or a share deal better for the buyer?

On risk alone, the asset deal, because liabilities are in principle left behind and you define what transfers. In practice it is more laborious, because contracts and permits have to be reorganised, and it is often less attractive for the seller in tax terms — which is reflected in the price. The structure is part of the price negotiation, not separate from it.

Am I liable as a buyer for the company's historic debts?

Partly yes, and irrespective of the purchase agreement: § 38 UGB transfers business-related legal relationships together with their liabilities, § 1409 ABGB creates liability for debts you knew of or ought to have known of, capped at the value of the assets taken over, and § 14 BAO captures business-related taxes from the last calendar year preceding the transfer of title. This is why due diligence is not a formality.

Does buying GmbH shares in Austria require a notary?

Yes. The transfer of shares between living persons requires a Notariatsakt (§ 76 Abs. 2 GmbHG), as does any undertaking to transfer shares in the future. The articles of association may additionally require the consent of the company.

Does buying shares trigger real estate transfer tax?

It can, where the company owns real property. Since 1 July 2025 the threshold is 75 per cent of the shares and the observation period is seven years, and indirect acquisitions as well as connected groups of acquirers are caught. The rate is 3.5 per cent of the fair market value for real estate companies, otherwise 0.5 per cent of the property value.

How long does a company acquisition take?

Six to twelve months from qualified first contact to closing is the market norm. With well-prepared sellers and clear financing, three to six months is realistic. Delays usually arise from missing documents, the financing commitment and third-party consents.

Do I automatically take over the employees?

On a transfer of business you step into the existing employment relationships as employer — with prior service, remuneration and collective agreement gradings intact. Dismissal on the grounds of the transfer is not permitted, and both transferor and acquirer must inform those affected.