Jumping into the vibrant and promising Vietnamese market by investing in an operational business is a popular option. A prime benefit is the immediate ability to generate revenue by maintaining operations as they are post-acquisition.
Moreover, it conserves significant time and effort needed to establish a brand reputation, as well as to develop relationships with customers, partners, suppliers, and others. Existing employees are crucial assets as they are familiar with the company, market, consumer behavior, and internal protocols. These compelling reasons make purchasing an existing business an attractive alternative to starting one from scratch for those looking to venture into the Vietnamese market.
However, making a serious decision like acquiring a business necessitates thorough research and evaluation. It’s critical to understand certain factors and assess the potential growth and performance of the business. This article by Iris International provides a guide to understand and evaluate the essentials for first-time buyers of operating businesses in Vietnam.
What Is The Essential Information About A Company You’re Considering For Acquisition?
1/ Grasping the Motives for Sales
Analyzing the reasons behind a company’s sale is a crucial step when narrowing down your possible acquisition targets.
Multiple factors can contribute to a company’s sale – the owners might be shifting business strategies, relocating, pursuing personal goals, or dealing with financial difficulties. In many cases, owners opt to sell, steering clear from drawn-out dissolution procedures, while being able to reclaim a significant part of their investment.
2/ Understanding the Shareholders and Ownership Structure
The total number of shareholders can provide a glimpse into the company’s structure. Acquiring the entire business could necessitate consensus from all shareholders, ensuring a smoother acquisition process.
Moreover, comprehending the ownership structure can guide you through the next steps of the purchase, whether the business is locally owned, foreign-owned, or possibly transitioning between foreign investors.
3/ Evaluating the Resources at the Time of Transfer
Human Resources: Gaining insight into the company’s structure and the remaining workforce post-transfer can offer invaluable knowledge about the business’s operations, highlighting areas of potential growth or improvement.
An overview of the monthly employment costs can also assist in effective budget planning.
Assets & Properties: A thorough comparison between the company’s asset value and the purchase price is essential. This process might involve engaging a credible valuation firm to assess all tangible and intangible assets, securing a fair and accurate deal evaluation.
4/ Consideration of Business Location, Lease Terms, and Rent
The location is a fundamental aspect for businesses like restaurants, bars, and gyms. Detailed inspection of the location, lease duration, rental fee, and other terms can provide advance notice about possible contract extension or relocation.
5/ Office Visitation
While online communication is common, it’s advisable to arrange an in-person meeting at the business site whenever feasible. This aids in verifying the condition of the operative business, furniture, equipment, and assets.
6/ Pricing Structure
Occasionally, the cost of a prospective business may surpass your initial budget. Gaining a thorough understanding of the maximum purchase price can guide prompt decision-making and effective financial planning for post-acquisition activities.
Generally, the asking price reflects the company’s asset value and resources. Employing a professional service to accurately gauge the business’s real worth can help discern the feasibility of the asking price.
7/ Urgency To Sell The Company
Negotiating with the business owners comprises discussing the purchase price and terms. If the sellers are keen to seal the deal, they may prioritize a quick closure, potentially at a lower rate.
How can Iris International aid you in acquiring a company in Vietnam?
Iris International takes pride in being a comprehensive consulting firm in Vietnam with an extensive insight into the market and business environment. We maintain a large, highly-verified database of companies that are up for sale in Vietnam for your consideration.
Our commitment is to act in the best interests of our clients, offering holistic support throughout the acquisition process. Our skilled team will guide you through market research, due diligence, value assessment, negotiation, and legal procedures, ensuring a seamless and successful acquisition.
We also extend post-acquisition services such as accounting, recruitment, and other secretarial services to help you extract the maximum potential from your newly acquired company.
Purchasing a company in Vietnam can be thrilling yet daunting. With Iris International’s expertise and support, you can conveniently navigate the intricacies of the Vietnamese market. Trust us to find the perfect match for your business objectives and facilitate a successful acquisition. Book a free consultation with us now for more information on how we can assist you in acquiring a company in Vietnam!
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