The year 2025 brings major changes to the Czech mergers and acquisitions (M&A) market that will have a direct impact on business owners. From new tax rules to changing financing methods, every step in the sale of a business will require careful planning. What business owners need to know to succeed in the marketplace
Tax changes: Higher tax burden when selling a business
As of January 1, 2025, the tax exemption for sales of business interests by individuals is changing. Whereas previously, if the share was held for more than 5 years, no tax was payable, you will now still have to keep track of the value of the company being sold. The new tax exemption is up to 40 million. Above this threshold, you will have to pay income tax on the income of the FO:
- 15% income tax for amounts up to CZK 1.9 million,
- 23% tax for amounts above this threshold.
For owners of smaller and medium-sized businesses, this means a significant reduction in the net profit from the sale of the business.
Tip: What can reduce this tax burden? Secure a market valuation of the company by an expert appraisal, which we wrote about last time.
Generational turnover and family business sales
In the Czech Republic, many companies are still owned by the entrepreneurs who built them in the 1990s. However, succession is often unresolved, which increases the number of companies for sale. This trend is set to continue in 2025, with rising tax burdens likely to accelerate exit decisions.
Tip: If you’re planning to pass the business on to the next owner, focus on preparation – transparent accounting, debt resolution, and optimizing processes that increase its value in the marketplace.
Transaction financing: The end of cheap money
High interest rates are making it difficult to access bank financing, which is having an impact on M&A transactions. Increasingly, buyers are turning to alternative financing models such as earn-out structures (part of the price is paid gradually according to the company’s performance) or private equity involvement.
Tip: If you’re selling a company, be prepared to be flexible in your negotiations – for example, staggering payments or working directly with private equity investors.
ESG and technology trends
Investors are increasingly valuing companies that meet environmental, social and governance (ESG) criteria. At the same time, there is a growing demand for technology-focused companies, particularly in areas such as AI, cybersecurity or sustainable energy.
Tip: Invest in innovation and ESG measures – you’ll not only increase the value of your company, but also reach a wider range of potential buyers.
The key to a successful sale in 2025
Business owners in 2025 will once again face increasing challenges in which higher taxation, more expensive financing and an increasingly competitive marketplace all play a role. Successfully selling a business will require strategic preparation, flexibility in negotiations and the ability to adapt to changing conditions.
If you’re considering selling your business, start planning now – a well-prepared transaction not only minimizes risk, but also maximizes the value you gain.
