Vietnam’s vibrant economy continues to draw global investors who are keen to harness its promise. However, initiating a business from the ground up isn’t the sole route to achievement. The acquisition of a pre-existing Vietnamese firm presents an attractive alternative – an opportunity to benefit from well-grounded operations, a steady client base, and native proficiency.
Picture yourself at the helm of a flourishing Vietnamese enterprise, thus immediately securing a strong position in this lively marketplace. Expedite your expansion by taking over a business with a credible history, circumventing the initial obstacles of setting up a new establishment.
Why Should You Consider Purchasing An Existing Business In Vietnam?
Investing in a functioning business in Vietnam presents an abundance of advantages:
- Immediate start: Bypass the extended initiation phase and commence business operations right away, utilizing pre-existing resources and workforce.
- Pre-existing clientele: Take on a faithful clientele, effectively diminishing the need for comprehensive initial promotional activities.
- Understanding local nuances: Harness the insights garnered from the previous company’s experience in dealing with Vietnamese rules and business modalities.
- Competent staff: Avail the services of a team packed with talent and experience, significantly easing recruitment concerns.
What Are The Steps To Buy An Operation Business In Vietnam?
Taking over a Vietnamese business can be exciting yet challenging. Unexpected legal or financial obstacles can disrupt your plans of owning a company. Furthermore, rushing the process without careful examination could result in purchasing a company with undisclosed issues, negatively affecting your profit margins.
This detailed guide provides you with essential knowledge and a step-by-step approach to confidently buy a functioning business in Vietnam.
Let us map your journey to a successful business acquisition:
Step 1: Due Diligence
This is a vital phase of acquiring a Vietnamese business. Due diligence involves comprehensive investigation or exercise of caution that a business or individual would conventionally take before entering into any contract or agreement with another party.
This step involves validating company data to ascertain its accuracy and authenticity, examining the company to identify any tax dues, proceedings with state agencies, revenue status, business assets, legal document completion, operational framework, staff, and adequacy of charter capital for the acquisition. It may also be necessary to scrutinize the business’s registered lines to ensure compatibility with foreign investment.
The due diligence process also includes reviewing the company’s financial records to evaluate its financial stability and long-term profitability. Analyzing income statements, balance sheets, cash flow statements, and other relevant fiscal reports is part of this process.
Background checks on the company’s key personnel add another dimension to the due diligence process. It verifies their skills, experiences, and potential conflicting interests.
We suggest engaging a professional consultancy firm in Vietnam for a thorough due diligence process – their insights and local expertise can be of immense value in identifying potential risks.
Step 2: Securing the “Approval for capital contribution”
This approval is a declaration that the buyer is eligible to proceed with the acquisition process. It involves confirming the prospective buyer’s legal standing, financial capability, the Sale contract, and other criteria stipulated by the local governing body.
Step 3: Updating the business certificate
After successfully completing the initial steps, you can go ahead and amend the business certificate to reflect your information.
All Vietnamese businesses are obligated to have a Business Registration Certificate (BRC), which outlines the essential information about the company. Depending on the type of business you are purchasing, you might also need another document, the Investment Registration Certificate (IRC), which is exclusively for foreign-owned businesses and local businesses without this certificate.
When buying a foreign-owned enterprise, make sure to update the details on both BRC and IRC.
Step 4: Finalizing the purchase price and capital contribution
After amending the documents, you can proceed with the payment through a Direct Investment Capital Account (DICA). The sum will be divided into two parts: the agreed purchase price between you and the current owner, and the capital investment of the company.
Step 5: Changing ownership details with the Tax Department and bank
Finally, inform the bank about the new ownership and finalize the update of owner details.
The process generally takes about 4-6 weeks from the date of document submission, provided there are no issues raised by the officials.
How Iris International assists in acquiring an operating business in Vietnam:
Iris International boasts extensive experience in aiding hundreds of acquisition deals for clients in Vietnam. Our services are designed to ensure the successful acquisition and operation of a business in this vibrant market. Our team of experts will navigate you through every step of the process, from diligent research on potential businesses to negotiating fair purchase prices and managing all legal and financial aspects of the acquisition.
Our goal is to guide our clients towards the best choices, validating that the companies up for sale are secure, debt-free, and absent of any legal complications prior to acquisition. We offer specialized due diligence services to confirm the company’s compliance and inform our clients about potential risks associated with buying certain businesses.
We offer a comprehensive suite of services that cover everything – right from identifying potential companies and conducting due diligence to assurance of secure acquisition options. Our services also include preparing the necessary paperwork, guiding you throughout the acquisition process, assistance in setting up the DICA account, and instructions on capital contribution.
Post the ownership transfer, we also offer added secretarial services such as recruitment, accounting, compliance, tax advisory, among others. These services are designed to streamline and efficiently manage your business operations.
Don’t hesitate to reach out to us for more information on how we can assist you in acquiring an operating business in Vietnam. With Iris International on your team, you can confidently venture into the Vietnamese market and realize your business aspirations.
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