Buy a shelf or aged company in Vietnam – Quick market entry for foreign business

Buy a company in Vietnam Vs. Create a new one

When contemplating the initiation of your business in Vietnam, you are confronted with a critical decision: should you commence a new enterprise from the ground up or acquire an established one? Each option has its own set of advantages and disadvantages. However, we firmly believe that the benefits associated with acquiring a ready-made company are compelling and worthy of consideration. Making an informed decision is crucial, particularly when considering that a significant number of businesses fail within their first five years. Thus, it is imperative to position yourself for success right from the beginning.

To begin, let’s clarify the concept of a “shelf company” or “aged corporation.”

What is a shelf company?

A shelf corporation, often referred to as a shelf company or aged corporation, is a legal entity (company or corporation) that has been established but remains inactive. It was created and deliberately left dormant, essentially placed on a “shelf” to “age.” Such a company can later be purchased by a new owner who intends to initiate a business without undergoing the entire process of establishing a new entity.

Reasons for buying a shelf or aged company in Vietnam

Common reasons for buying a shelf corporation include:

1. To save time

Company launch in Vietnam can be a time-consuming and challenging endeavor. For a straightforward company registration in Vietnam, the incorporation process typically spans 4-6 weeks. However, for businesses with conditional or restricted operations, which may necessitate additional approvals from government ministries or third parties, this timeline can extend to several months or even a year.

Given these complexities, discovering a ready-made company available for purchase can be a highly desirable solution for many investors. When there are no significant alterations in registered business activities or capital, the transfer of ownership for a company can be completed in approximately 45 days. In comparison to starting a new company from scratch, acquiring an off-the-shelf corporation is evidently the more advantageous choice.

2. To gain the opportunity to bid on contracts

Certain jurisdictions stipulate that a company must have a specific operating history to possess this capacity. This requirement is particularly relevant in industries such as construction, architecture, engineering, consulting, or other professional fields where a company’s “experience” plays a crucial role in securing contracts and bids.

In Vietnamese government-owned projects, the longevity of project contractors or subcontractors is often explicitly outlined. An established company with a longer track record consistently enjoys a stronger reputation and is consequently perceived as a more reliable and trustworthy partner than a newly registered business.

3. To show corporate longevity to attract clients

Consider this scenario: you have two options for a business partner. One company has been operating in its industry for several years, while the other is relatively new, having been in business for only six months. Which one would you choose?

In many cases, business policies and project requirements stipulate that a company must have a certain number of years of experience in its field. When compared to newly established companies, shelf and aged companies appear more established and, consequently, more trustworthy.

Clients who place their trust in well-established businesses are often themselves reputable and well-established. This reduces the overall risk of doing business and fosters a win-win situation. So, why limit your options by not considering the purchase of an off-the-shelf company?

4. To gain access to corporate credit

The age of a company carries significant weight in terms of experience and credibility. It serves as a track record, offering evidence of past operations and transactions. Consequently, such a company tends to have a better reputation compared to newly registered businesses. Should the owner ever decide to apply for a bank loan, banks are more likely to view it as a reliable investment option.

Moreover, an older company can instill greater trust in government officials when engaging in public services, such as sponsoring work permits for expatriate employees or applying for a visa for the company’s owner. In fact, there have been instances where a company’s age played a pivotal role in the success of a visa application. Although not openly acknowledged, this practice is relatively common in Vietnam. You’ve probably heard the phrase, “your company is too young to do anything,” and it often holds true.

Market entry shortcut for foreign investors in Vietnam

Considering all the advantages outlined above, acquiring an off-the-shelf business or an older company offers a highly advantageous avenue for conducting business in Vietnam. This method of business ownership serves as a fast track to the market for foreign investors, effectively halving the time needed for incorporation. Consequently, when compared to a newly established company, the inherent value of an aged business is unparalleled.

What advice for foreigners buying a shelf company in Vietnam

• Each year, Vietnam has a multitude of aged corporations available for purchase. Locating one is not a daunting task, but identifying a reputable option may require expert guidance. It’s advisable to seek professional advice, particularly if you are unfamiliar with the language or business culture. Here are some key points to consider:
• Locate a reliable business seller.
• Follow the necessary steps when purchasing a shelf business in Vietnam.
• Be mindful of the timeline.
• Pay attention to post-transfer requirements.
• Keep an eye on operational matters.

Buy off a shelf business with Iris International

At Iris International, we compile information from over 10,000 businesses available for purchase in Vietnam. This extensive database allows us to assist you in finding a suitable shelf company that aligns with your specific requirements. Iris International serves as an intermediary between the client and the shelf business owner, facilitating negotiations and expediting the transaction process.

Once the deal is confirmed, we proceed with the necessary documentation to transfer ownership to our client, ensuring the company is fully registered under the new owner’s name. We provide guidance and support throughout the entire process, from start to finish.

Contact us for more information.