Selling a business confidentially: the process, step by step

Why a business sale has to stay confidential

A business is sold twice: once to the buyer, and once to everyone who finds out it is for sale. If word gets out early, good staff look elsewhere, competitors tell your customers you are leaving, and suppliers shorten your credit. Each lowers the price, and if the sale falls through, the damage stays.

So each stage gives a buyer a little more, and asks something of them first: a signature, then proof of funds, then a committed offer.

The process at a glance

On auction, the groundwork and due diligence come before the bidding, and the conditions of sale take the place of the letter of intent.

Step 1: appraisal and preparation

When we appraise a business, we look at the financials, the lease, the asset register and the staff complement, and tell you what a buyer is likely to pay and why (see how to value a business in South Africa). Then:

• The mandate. Signed by whoever is entitled to sell: in a share sale, the shareholders; in a sale of the business itself, the company through its directors; for a trust, its trustees, who may act only once the Master of the High Court has authorised them in writing (letters of authority). A company selling all or the greater part of its assets or undertaking also needs its shareholders' special resolution (step 11), so test their support now.
• The documents. Two years of financial statements, the lease, key contracts, licences, the asset register and a staff list by role.
• The weak spots. Personal costs in the accounts, a lease near expiry: fix them before a buyer finds them.
• The cost. What selling costs, and who pays it, in writing before you sign anything.

Steps 2 and 3: the anonymous teaser and the NDA

The teaser is a one-page summary that lets a buyer decide whether to ask for more without learning which business it is: sector, region (not suburb), turnover and profit in broad ranges, what is included and why the owner is selling. Leave out photographs, exact years in business, brand names and anything only you make. If three people in your industry could guess it, rewrite it.

A buyer who wants more signs a non-disclosure agreement before receiving the name. A useful NDA:

• limits use of the information to evaluating this purchase;
• binds the buyer's advisers and financiers too;
• bars approaches to your staff, customers, suppliers or landlord without consent;
• requires everything to be returned or destroyed if the buyer walks away;
• for a buyer abroad, says which country's law governs it and where disputes are decided.

In a private sale, nothing identifying goes out before the NDA. On a public auction the catalogue may name the business; the NDA then protects the memorandum and the books.

Steps 4 to 6: memorandum, qualification and data room

The information memorandum (our information pack) is the selling document: what the business does, its history, customers by type rather than name, staff by role, premises, assets and summary financials with the owner's personal costs separated out. Make it accurate rather than glossy: every claim is checked in due diligence.

Buyer qualification. Before the detailed books are released, the buyer shows who they are and that they can fund the purchase, which keeps out competitors fishing for your margins.

The data room, usually online, holds the documents behind the memorandum. Release it in layers: customer names, pricing and margins last, and only to a buyer with agreed terms. The Protection of Personal Information Act allows personal information to be processed only if it is adequate, relevant and not excessive for the purpose, so share payroll by role before names. Online, a buyer abroad can see the same documents as one in Johannesburg, but personal information about staff or customers is a different matter: under section 72 of the Act it may go to a buyer outside South Africa only if that buyer is bound, by law, binding corporate rules or a binding agreement, to protect it to a standard substantially similar to the Act's, or if the people concerned consent (or one of the few other grounds in that section applies). Until then, keep it anonymised.

Step 7: offers by private treaty, or an auction

We sell businesses both ways, recommend one on the first confidential call and explain why; the choice is yours.

Private treaty. Qualified buyers make offers, usually indicative and subject to due diligence. You shortlist, negotiate and sign a letter of intent with one. It suits deals needing a long due diligence, franchisor approval or a handover period with the owner.

Auction with a reserve. Every bidder buys on the same published conditions of sale on a fixed date, and the reserve is your floor (see the reserve price explained). Landlord and franchisor positions are settled first, and buyers do their due diligence before they bid. A bidder who wants the zero rate of value-added tax (VAT) on a going concern (see step 10) should be registered for VAT, or have applied, before bidding; a buyer abroad bidding through a new South African company needs that company registered, or applied for, by then. Our auctions take bids online, and some on site as well, and a buyer who is not a South African citizen can open an account in our online auction room with a passport number (see how to register and bid online).

In September 2026 we offered the CMVAS Group, a connectivity, ICT distribution and critical power business, on auction as separate businesses and as a whole, with bidding on site, online and by webcast; the highest offer, parts or whole, was to decide the winner.

Steps 8 and 9: letter of intent and due diligence

In a private sale, you and the chosen buyer sign a letter of intent (or heads of terms): the price and how it is calculated, shares or business, what is included, the main conditions, the timetable and any exclusivity period. State which clauses bind (usually confidentiality and exclusivity) and which do not.

Due diligence is the buyer checking that the memorandum was true:

• Finances: management accounts against bank statements, debtors, creditors, stock.
• Tax: the tax returns and SARS (South African Revenue Service) assessments, which the seller provides, and a "Good Standing" tax compliance status PIN for the company being sold (in a sale of the business itself, for the seller), which the buyer's South African attorney or accountant can verify on SARS eFiling. It shows the status on the day it is checked.
• Legal: the company's records at the CIPC (Companies and Intellectual Property Commission, the company registry), the share register, the lease, contracts needing consent on a sale, litigation.
• Staff: contracts, accrued leave and collective agreements, because in a going concern sale the staff move to the buyer.
• Licences and empowerment: trading and sector licences, and B-BBEE (Broad-Based Black Economic Empowerment) status: South Africa's system for scoring a business on black ownership and participation. Organs of state and public entities must apply it when they issue licences, buy goods and services or award incentives, so check it where the business sells to the state or depends on a licence.

The full list is in the due diligence checklist.

Step 10: the sale agreement

The first choice is the structure:

• A share sale. The buyer buys the shares in the company that owns the business, and the company, a separate legal person, stays the owner. What that means for its staff, contracts and liabilities is a question for your attorney, and some leases and contracts need consent when control changes. Securities transfer tax of 0.25% of the price or the market value of the shares, whichever is higher, is due on the transfer; SARS lists it as payable by the purchaser (SARS, Taxation in South Africa 2026, section 17; the tax has applied since 1 July 2008: SARS: securities transfer tax).
• A business sale. The business itself is sold as a going concern. Under section 197 of the Labour Relations Act the staff move to the buyer automatically, on their existing terms (or terms on the whole not less favourable, except where a collective agreement sets them), unless a different arrangement is agreed in writing with their union or other representatives under section 189(1). Seller and buyer are jointly liable for staff claims from before the transfer. If the seller is insolvent, or is entering a compromise to avoid winding up, section 197A applies instead: staff still move to the buyer, but claims from before the transfer stay with the seller, and the section 197(7) valuation and disclosure rules do not apply. Your attorney confirms which section governs your sale.

In a business sale, VAT is charged at zero per cent (SARS Interpretation Note 57) only if both parties are VAT vendors (registered for VAT with SARS), the business is sold as an income-earning going concern with all the assets needed to run it, and the contract says so in writing, including that the price includes VAT at zero per cent. A buyer not yet registered must have applied before the agreement is concluded, and the registration must then be granted; a buyer abroad who sets up a South African company to run the business needs that company to have applied in time. Otherwise VAT is charged at the standard rate, currently 15%, in force since 1 April 2018 (SARS: VAT; SARS, Taxation in South Africa 2026). See selling a business as a going concern.

The agreement also covers price adjustments (stock counted on the effective date and, in a business sale where section 197(7) applies, the accrued leave and severance pay that seller and buyer must value and allocate), warranties, a restraint of trade, the handover period and the conditions.

Step 11: conditions to be met before completion

Your attorney confirms which apply. Until they are met, you still run the business.

Step 12: completion and handover

On completion the price is paid, ownership passes and the buyer takes control. A good handover includes:

• a stock count on the effective date;
• your staff hearing it from you, when you choose and with a labour attorney's advice on timing, with each transferring employee told the agreed terms on their accrued leave and severance pay where section 197(7) applies;
• customers, suppliers and the bank introduced to the new owner;
• a handover period for relationships and know-how.

Hold the losing buyers to their NDAs.

When the buyer is outside South Africa

The process is the same, but plan the money early. For exchange control, a non-resident is a person or company whose normal residence, domicile or registration is outside the Common Monetary Area (South Africa, Lesotho, Namibia and eSwatini). A South African living abroad, or a South African family's offshore company, may fall under different rules: ask the bank first. Exchange control is run by the Financial Surveillance Department (FinSurv) of the South African Reserve Bank (SARB), through banks called Authorised Dealers. The rules are being rewritten: draft Capital Flow Management Regulations were published in April 2026, and the current rules apply until the new regulations are final.

• Bringing the money in. Non-residents may invest freely if the deal is at arm's length, at a fair market-related price, and financed in an approved way, such as foreign currency brought in through the bank. A loan account between a resident and a non-resident needs FinSurv's prior written approval.
• Proving the price. When shares change hands, the onus is on the South African buyer or seller to prove an arm's length, fair and market-related price. Keep the valuation and competing offers.
• The paper trail. A share certificate in which a non-resident has any interest must be endorsed "Non-Resident". Keep it with the bank's record of the money coming in. Sale proceeds of non-resident owned assets may be regarded as freely transferable.

Buying a business does not by itself give you the right to live or work in South Africa. To move here and run it yourself you need a business visa, which today asks for R5 000 000 in cash brought in from outside South Africa (GN 560 of 15 July 2014) and at least 60% of staff to be South African citizens or permanent residents (Immigration Regulations, regulation 14): see the South Africa business visa guide.

A buyer abroad needs a South African attorney, a tax adviser and their bank. More in exchange control for foreign investors, buying a business as a foreigner and selling to a foreign buyer, on our international buyers page, and in the businesses for sale.