Business buying — deals' support
So well, you decided to buy acting business. Our congratulations! It means that you and your company are successful, you've earned money you want to invest profitably.
But investment should be reasonable “not to suffer because of wasted money”.
First we want to notify you: according to the international research data – around 70 % of business buyers are those people who purchased business emotionally or “intuitively”. Those buyers declared they would never buy this business again so quickly having spent no money and time on its thorough check.
The M&A deals (business purchase and sell) are the most difficult business operations. There're no practice and active legislation in this domain in Ukraine. Performing business purchase-and-sell deals economical, legal, accounting, taxation, social and psychological aspects should be considered. One little omission may seriously undermine or even destruct business either of a company buyer or of a purchased one. The only solution in such case is to buy business thoroughly checked.
The cases below are to approve the above mentioned:
Business purchase:
- Business purchase - of retail dealer's company. After we conducted Due Diligence (pre-selling check) of dealer’s retail company we revealed that one of the constitutors secretly registered the company being sold as a guarantee of his private credit to the amount of 1 mln USD by 22 annual % to the 10-year term, foreign customer refused from the deal at once.
- Business purchase - 50% of shares in huge export-and-import business. After we conducted Due diligence (pre-selling check that included legal audit, taxation audit, business estimation and financial analysis) of huge export-and-import company, risks of 3 mln. Euro was revealed while company cost made minus 22 mln. UAH. It was connected with ineffective management, big credits and fraud of company-seller officials. As a result foreign buyer offered his 50% stock to the sellers and left the business.
- Business purchase - woodworking complex. After we conducted company Due diligence (pre-selling check), it came evident that the sellers «deceived» buyers regarding the owner's rights for the factory land. The land was rented with expired terms of rent and not owned. At the same time the seller's relations with local authorities were spoiled (seller promised school renovation but failed to), and the rent was not extended. The buyer refused to purchase the object.
Business purchase – foreign farming machines selling company. In the frames of Due diligence (pre-selling check) we conducted unexpected fixed assets' inventory of company being sold. As a result we found out that two expensive farming machines are sold but are accounted on company balance as well as some machines were almost sold by general authorities but still accounted on company balance. The buyer refused to work with unfair sellers.
At the same time having analyzed success and growth of huge and well-known international companies, it's possible to make a conclusion that their growth, success and capitalization are evidences of successful business purchases. Business purchases were performed by internal groups of company specialists. They included lawyers specializing in economic, corporate, industrial law; auditors, tax consultants, estimators, financial analysts, marketing specialists. Otherwise they used services of independent consulting companies that performed Due diligence, or in other words – checking procedures of companies being purchased.
Growth of pharmaceutical, metallurgical companies, energy and media holding companies in their majority is stipulated for series of successful business purchasing.
Thus, business may and should be purchased if it's really profitable as sellers declare or if it meets your special expectations.
To purchase business it's necessary to do the following:
- Check the seller's reputation,
- Conduct taxation audit (desirable for the last three years: terms of tax imitation of action),
- Conduct legal audit (including property, rights and trademarks ones),
- Conduct actual inventory of assets,
- Determine all liabilities including the off-stage ones,
- Determine any possible pretensions, trials, company suits after your purchase and take measures to minimize your risks.
- Draw up a draft of a sales contract protecting you as a buyer from many risks,
- Consider business purchase process thoroughly by all stages of the procedure,
- Determine responsible person for the process of business purchase and merger of your business with a purchased one,
- Estimate cost of business or cost of creating the same one from scratch,
- Discuss process of the owner's leaving management,
- and many other actions.
Pleasant and important moments for customer
Expenses on Due diligence (pre-selling check), are much less than losses buyers bear after they purchase unchecked business.
Having Due diligence report of company being purchased it's possible to decrease company cost up to 50 % as a result of haggling based on the report points.
