Buying or starting a business in another country is a fantastic way to expand your horizons. Most people think of purchasing existing businesses or creating new ones as a way to grow current companies. Out of all the existing strategies, buying a foreign company is the fastest way to get a foothold overseas. Business owners can quickly get the ball rolling.
How Can Buying An Existing Business Help You Expand?
Buying an existing foreign company means purchasing access to instant overseas markets. You would not have to spend a lot of money conducting research, finding clients, and setting up branding and marketing strategies. You may also not have to spend on setting up manufacturing units, hiring new employees, and planning for additional contingencies.
Most existing businesses already have suppliers and distributors that can help you get established quickly. If you want, you can rebrand the company and continue operating based on the earlier existing framework. Local authorities will also consider you a local business and not a foreign one from a rules, regulations, and tax standpoint.
Another plus point is that you would not have to struggle with local government authorities, the language, and existing vendors.
If you’re unsure about the paperwork and need help purchasing the overseas company, you should hire reputable lawyers from Oxford. Doing this will take a load off your head. Having experts deal with all the paperwork and transactions will ease the process and make your transition smooth.
How To Buy Or Start A Business Overseas?
There are several challenges that you will face if you try to start a business from scratch. Before taking the plunge and planning a start-up, several options may be equally conducive to your business growth. Let us look at a few tips that will help pave the way for your overseas success.
Buy A Distressed Business:
In today’s volatile market, the Covid-19 pandemic has caused a lot of distress in several companies. Many business owners have run out of cash flows. Several businesses are suffering from poor management and need a fresh outlook. If a business is struggling, you could purchase and turn it around to become an eventual success.
Depending on the business’s financials, you could purchase it at a steal and help save money by buying a successful business with a higher market standing.
Buy Similar Businesses:
Suppose you’re looking to invest immediately and plan to be a part of the operations. In that case, it could prove fruitful to purchase a similar company to a business you are already running. Buying businesses with the same synergies help increase efficiency in operations, marketing, and understanding the demand and supply curve.
You could also add the new company as an extension to your current one and bring everything under one umbrella. Doing this is a great way to create a global brand name.
Do The Due Diligence:
Buying a company overseas is not as simple as it looks. To mitigate risks, understand the financials and the scope of business, you must complete a due diligence process. The due diligence checklist should contain the minimum:
- Existing Contracts/ Clients
- Intellectual Property Rights
- Strategic Fit
- Corporate Structure
- Accounting Records
- Hiring Policies
- Wages and Salary Structures
- Taxes
- Assets
- Liabilities
- Litigations
Conducting the due diligence before investing money will help save your company a lot of time, effort, and losses in the long term. It is always best to know the company’s workings, its base of operations, and all business-related aspects before making an offer.
Making An Offer:
You could have made a provisional offer for access to the documents and contracts, but you should get it done through your lawyers if you want to make a formal offer. The wording and interest in offer letters are precise. Your lawyers should also add clauses for mechanisms evaluating any existing debts and stock structures.
Usually, the initial offer will receive a counter-offer with equally complex legal wording. Before continuing with the negotiations, you should have a final price on the budget. If the business refuses to relent, always remember you can withdraw your offer.
Allowing companies to make a counter-offer is conducive to future business dealings, but it would be better if you selected another one if they refuse to negotiate. While deciding on the pay-out, you should be flexible to understand the tax benefits for the sellers. They may prefer the payments in slabs to avoid hefty taxation. If that is the case, you should speak to your lawyers about the possible repercussions for your business.
