ETA in Spain & Iberia: The Emerging Opportunity

Spain represents one of the most compelling and underexploited opportunities for Entrepreneurship Through Acquisition in Europe. With over two million business owners above the age of 55 and a massive wave of retirements expected over the next decade, the country faces a generational succession crisis that creates enormous deal flow for aspiring acquirers. Lower entry multiples compared to Northern Europe, combined with improving institutional support and the influential role of IESE Business School, make Spain—and the broader Iberian Peninsula including Portugal—an increasingly attractive destination for search fund entrepreneurs.

The Spanish market landscape

Spain's economy is the fourth largest in the eurozone and is characterized by a dense fabric of small and medium-sized enterprises. Approximately 99.8% of Spanish businesses are SMEs, and they employ roughly two-thirds of the private-sector workforce. The country's succession crisis is particularly acute: industry studies estimate that more than two million business owners are over 55, and a large proportion have no identified successor within their family.

Many of these businesses are concentrated in traditional sectors such as manufacturing, food and agriculture, distribution, professional services, and construction-adjacent industries. While Spain's economy suffered significantly during the 2008–2014 financial crisis, the businesses that survived are often well-managed, lean operations with loyal customer bases and experienced workforces. This resilience makes them attractive acquisition targets.

Legal structures for acquisition

Sociedad Limitada (SL)

The Sociedad Limitada, or SL, is the most common corporate form for Spanish SMEs and the typical target for search fund acquisitions. An SL requires a minimum share capital of €3,000, offers limited liability to its members, and has relatively straightforward governance requirements. Share transfers in an SL are subject to pre-emption rights in favor of existing shareholders, which must be carefully managed during the acquisition process.

Sociedad Anónima (SA)

The Sociedad Anónima is Spain's public limited company equivalent, requiring minimum share capital of €60,000. SAs are less common among smaller SMEs but are found among larger family businesses. Share transfers in an SA are generally unrestricted unless the articles of association provide otherwise, making acquisitions somewhat simpler from a corporate law perspective.

Holding company structure

As in other European markets, search fund acquisitions in Spain are typically structured through a newly incorporated holding company (sociedad holding) that acquires the target. The Spanish tax consolidation regime (régimen de consolidación fiscal) allows the holding company and its subsidiaries to file a single consolidated tax return, enabling interest deductions on acquisition debt to offset operating profits of the target.

Financing an acquisition in Spain

Senior bank debt

Spanish banks have become increasingly comfortable with acquisition financing in recent years. Major institutions such as CaixaBank, Santander, BBVA, and Bankinter all have SME lending capabilities, though the appetite for leveraged acquisition finance varies. Typical leverage for search fund deals ranges from 2x to 3.5x EBITDA, somewhat lower than in Northern European markets.

ICO financing

The Instituto de Crédito Oficial (ICO) is Spain's public credit institution, and its lending programs can be highly valuable for search fund acquisitions. ICO provides subsidized credit lines through commercial banks, offering favorable interest rates and extended repayment terms. The ICO Empresas y Emprendedores line specifically supports business investment and can be used to partially finance acquisitions. Amounts up to €12.5 million are available per project, with terms of up to 20 years.

Government support programs

Beyond ICO, Spain's autonomous communities (comunidades autónomas) often operate regional development agencies and financing programs that support business succession. Programs vary by region but may include subsidized loans, guarantees, or grants for business transfers. ENISA (Empresa Nacional de Innovación) provides participative loans that can complement senior debt in acquisition structures.

Seller financing

Seller financing is less culturally embedded in Spain than in France or the UK, but it is becoming more common as the search fund model gains traction. Vendors are often willing to defer 10–20% of the purchase price over one to three years, particularly when the buyer demonstrates a genuine commitment to preserving the business and its employees.

Lower entry multiples

One of Spain's most attractive features for search fund entrepreneurs is the relative affordability of acquisitions. While businesses in the UK or Germany might trade at 5x to 8x EBITDA, comparable Spanish SMEs can often be acquired at 3x to 5x EBITDA. Several factors contribute to these lower multiples.

• Supply-demand imbalance: The sheer volume of businesses facing succession issues creates a buyer's market, particularly outside Madrid and Barcelona.
• Limited acquirer ecosystem: While private equity has become active in Spain's mid-market, the micro-cap space (€500K–€3M EBITDA) remains underserved by institutional buyers.
• Information asymmetry: Many Spanish SMEs lack audited financial statements and have complex tax histories, which deters larger institutional buyers and creates opportunities for hands-on searchers willing to do deep diligence.
• Regional opportunities: Businesses outside Madrid, Barcelona, and Bilbao often trade at even lower multiples due to the smaller pool of local acquirers.

IESE's role in Spanish ETA

IESE Business School in Barcelona has been the single most important institutional catalyst for search fund activity in Spain and Latin America. Professor Rob Johnson pioneered the study and promotion of the search fund model at IESE, creating a dedicated course and research program that has trained hundreds of aspiring searchers.

IESE's contributions to the Spanish ETA ecosystem include the annual International Search Fund Study, which provides the most comprehensive data on search fund performance globally. The school's alumni network spans Spain, Portugal, Latin America, and beyond, creating a dense web of searchers, investors, and advisors. Many of Spain's most successful search fund acquisitions have been led by IESE graduates, and the school's reputation provides searchers with instant credibility when approaching Spanish business owners.

The Portuguese market

Portugal shares many of the same dynamics as Spain and is increasingly attracting search fund activity. The country has approximately one million SMEs, a similar demographic profile among business owners, and lower entry multiples than Northern Europe. Several factors make Portugal a complementary market for Iberian searchers.

• Similar succession crisis: Portugal faces the same generational wave of retirements, with a large proportion of SME owners over 55.
• Competitive valuations: Portuguese SMEs typically trade at 3x to 5x EBITDA, comparable to Spain.
• EU membership: Full EU membership provides regulatory alignment with Spain and access to European structural funds.
• Growing startup ecosystem: Lisbon's thriving tech and startup scene has raised the profile of entrepreneurship and made business succession a national conversation.
• Non-Habitual Resident (NHR) regime: While primarily designed for individuals, Portugal's favorable tax regime for foreign residents can benefit search fund entrepreneurs relocating to the country.

Cultural negotiation norms

Spanish business culture is distinctly relationship-oriented, and understanding cultural norms is essential for successful deal-making.

• Personal relationships first: Spanish business owners strongly prefer to sell to someone they know and trust. Expect multiple meals, conversations, and informal meetings before deal discussions begin in earnest.
• Family involvement: Family members often play a significant role in the decision to sell, even if they are not formally involved in the business. Building rapport with the broader family can be as important as negotiating with the owner.
• Emotional attachment: Many Spanish entrepreneurs have built their businesses over decades and have deep emotional ties. Demonstrating respect for their legacy and commitment to employees is critical.
• Pace of negotiations: Deal timelines in Spain tend to be longer than in Anglo-Saxon markets. Patience and persistence are essential virtues.
• Regional identity: Spain's strong regional identities (Catalonia, Basque Country, Galicia, Andalusia) influence business culture. Understanding and respecting regional distinctions signals cultural awareness.

Tax considerations

Corporate tax

Spain's general corporate tax rate is 25%, with reduced rates available for newly created companies (15% for the first two years with a positive tax base). The tax consolidation regime enables holding structures to offset acquisition interest against operating profits, subject to limitations on deductibility.

Régimen de Autónomos

Many Spanish SME owners operate as autónomos (self-employed individuals) rather than through a corporate structure. This is particularly common in smaller businesses and the service sector. Acquiring the business of an autónomo requires an asset purchase rather than a share purchase, which has different tax implications. The acquirer must incorporate a new entity, transfer assets, and novate contracts and employee relationships.

Transfer tax

Share transfers in Spain are generally exempt from Transfer Tax (Impuesto sobre Transmisiones Patrimoniales) and VAT, making share purchases tax-efficient. Asset purchases, however, may trigger Transfer Tax at rates varying by autonomous community (typically 6–10%).

The growing Iberian ecosystem

The search fund ecosystem in Spain and Portugal has expanded significantly in recent years. An increasing number of IESE, IE Business School, and ESADE graduates are pursuing searches, and several dedicated search fund investor groups have emerged with a specific focus on Iberian deals. Key ecosystem developments include the following.

• Dedicated investors: Several family offices and institutional investors in Spain now specifically allocate capital to search fund investments, providing not only funding but also mentorship and deal support.
• Advisory networks: Law firms, accounting practices, and corporate finance boutiques in Madrid and Barcelona have developed search fund expertise and can guide first-time acquirers through the process.
• Community events: Regular search fund meetups and conferences in Madrid, Barcelona, and Lisbon bring together searchers, investors, and advisors.
• Cross-border opportunities: The linguistic and cultural links between Spain, Portugal, and Latin America create opportunities for platform acquisitions with international growth potential.

Practical advice for Iberian searchers

• Language: Spanish fluency is essential for searching in Spain. While many business owners in major cities speak some English, negotiations and relationship-building occur in Spanish. For Portugal, Portuguese proficiency is strongly recommended.
• Local presence: Being based in-country signals commitment and enables the relationship building that is critical in Iberian deal-making.
• Professional advisors: Engage a Spanish notary (notario), tax advisor (asesor fiscal), and commercial lawyer (abogado mercantil) early in the process. The notarial system plays a central role in Spanish corporate transactions.
• Due diligence depth: Given the prevalence of informal accounting practices in some Spanish SMEs, thorough financial and tax due diligence is particularly important. Engage an auditor experienced with SME businesses.
• Patience: Building the trust required to close a deal with a Spanish business owner takes time. Budget for a search period of 18 to 24 months at minimum.