Buying a Business in Singapore: A Complete Guide

buying a business in singapore complete guide

Do you want to be your own boss? Are you afraid you won’t hack the process of starting a new business? Fret not. Entrepreneurial dreams don’t have to mean building a brand from the ground up.

Instead of clocking the 8-5 job under an indifferent boss, I can guarantee you an easy way out. Forget start-up capital and think about buying an existing business. The guarantee is that your journey to a fat bank account will hit the ground running.

Budding entrepreneurs know the truth. It’s not easy to find the killer business idea and transform into a star entrepreneur overnight. You feel the entrepreneur bug biting but don’t know where to start? The best option is finding an “entrepreneurship by acquisition opportunity. It’s simply identifying an existing business you can run, closing the deal, and smiling all the way to the bank.

Sounds easy? I kid you not. You’ll need to go through this business buying guide to understand the nuances, dynamics, processes, pros, and cons before you take the plunge. You must know how to avoid buyer’s remorse since your quest is to build a brand quickly.

Deciding When to Buy or Sell

The business buying or selling industry operates in a way such that there are sellers and willing buyers. That said, timing here is of the essence. There are good and bad times to buy or sell. All you need to know is when the timing is right.

For Sellers

It’s crucial to assess the growth prospects, the current state of business, or when you want to go into a different venture. By the way, you should be thinking of selling way before a circumstance that warrants the sale crops up.

For Buyers

Here, the crux might be the “when” Usually, it’s easy but personal preferences, including finances, are highly influential.

Before you decide to buy or sell, think whether you’ll need professional insight. You may choose to go with an attorney or business broker. Other times you may not.

Get Professional Help

If you’re selling, disposing a strong brand can be tricky. You need to keep it running as usual until the day you hand over. Professional help takes away the hassle of screening buyers, negotiating, valuing the venture. With such help, it’s difficult to be short-changed in the process.

For the buyer, a practised adviser helps you to transit through a process that is quite emotive. But you don’t have to fret over the complex paperwork, negotiations, or the viability of what you’re buying.

Places To Buy and Sell a Business in Singapore

LNT Global

LNT Global specialises in professional business brokerage and consultancy. The outfit connects businesses for sale owners with local and foreign buyers from Singapore and the larger ASEAN region. LNT Global helps business owners to expand through fund injection from angel investors. The firm handles business buy-overs from start to finish, and they offer a remarkable database of ready businesses and franchises for sale.

EbizSurf

EbizSurf provides online business for sale listings for buyers, investors, brokers, and sellers. The platform guarantees buy over success since they’re certified to operate under Singaporean laws. When you sign up with EbizSurf, you an access detailed financial history of the business you want to acquire.

Business for Sale

Business for Sale is the one-stop-shop for business buyers and sellers. It offers privately owned businesses and franchises. The platform boasts one of the highest numbers of listings in Singapore. They provide offers in industries ranging from F&B, horticulture, motoring, and websites, among others.

Property Guru

Property guru is one of Singapore’s highly coveted resources for buyers looking for a property. They work with an up-to-date pricing portfolio that enables buyers to find what they want easily. PropertyGuru revolutionised the traditional property ads scene by taking business for sale search online.

CommercialGuru

Commercial guru is a recognised Singapore commercial property outfit. It’s an all-inclusive solution provider for investors looking for ready investments and office space. CommercialGuru.com.sg has over 7000 commercial listings, and it provides property details, including maps, pictures, and future projections. It’s an ideal search resource for industrial, businesses, and retail space.

EasyBuySellBusiness.com

EasyBuySellBusiness.com helps small and established entrepreneurs to identify and pursue viable business for sale opportunities in Singapore. It’s an easy to use platform that is accessible and easy to use. Brand Singapore has feted it as Singapore’s Most Innovative Business for Sales Platform.

Look For Buyer

Look For Buyer is a boutique outfit that connects business people who want to scale by building on the efforts of business founders. They help budding entrepreneurs local and global to find, add value, and scale dormant businesses. The firm’s website is secure and helps you to navigate to a specific niche from where you want to purchase a business. You can initiate and seal a deal from the comfort of your home or office.

Smergers

Smergers is one of Singapore’s top business for sale platforms. It provides a unique buyer, seller, and lender partnership. Smergers presents a dynamic offer for sellers and franchises on a global scope. Their website isn’t a classified platform, and they present pre-screened business listings drawn from +1000 industries in over 100 countries.

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BizQuest Singapore

BizQuest has the highest number of business for sale listings in Singapore. It caters to the needs of buyers and sellers. BizQuest provides on-site filtering tools that enable visitors to navigate easily through price, niche, or location parameters. The platform is backed by a strong team of brokers, an inclusive franchise directory, and an inventory of local and global opportunities. BizQuest runs on mobile and desktop interfaces.

How to Choose a Business Broker

You know your business in and out, but that doesn’t mean you cannot be tricked when it comes to selling. Whether you’re selling or buying, working closely with a star business broker makes sense. How do you find a star broker then?

First of all, you need to ensure that there’s chemistry between you and your broker. The wrong agent can mean doom to the process. You don’t want somebody who’s too preoccupied with other deals. Compatibility means that your business won’t waste away on a listing and lose value in the process.

Specialised Experience

Go for a broker who specialises in selling (or buying) business like yours. Please note that the most experienced brokers may have trouble selling if they lack niche-specific skills. An ideal broker should be conversant with selling in your geo-location and within your price range.

Verified Track Record

A broker is as good as his/her track record. That means they should be comfortable displaying past successes, portfolios, and reliable references. If you have references, follow up to know whether the broker is as good as he/she claims.

Connections

A business broker who swears to handle everything on his own isn’t the best. The best agents in the game come with solid relationships. They liaise with accountants, lawyers and other professionals in the business for sale sector.

Straightforwardness

Pricing is a critical concern when selling a business-or buying. Some brokers won’t be open about prices. They simply want the other party to hear what they want to hear. This can delay the process. Always go for star brokers who are straight up about prices.

Definition of Buying a Business

It’s as easy as it sounds. Instead of starting your preferred enterprise from scratch, it’s legally possible to take over an existing business. The process is elaborate, and it requires lots of due diligence.

The prospects of buying a business though exciting, can be tricky. You know you’re purchasing a going concern, but you don’t know why the venture is listed for sale. However, if done properly, the perks outweigh the risks. Nothing sounds better to an entrepreneur than taking up a company that is already generating cash flow and profits.

What Is the Process of Buying Over the Business?

Enter Into Negotiations

In Singapore, the process of taking over a business starts with negotiations. The process isn’t tied to the price exclusively.

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Negotiations can be determined based on whether the purchase will be an asset acquisition or equity acquisition basis. Other factors can be the fate of current employees or other contingent terms and conditions.

If it’s an asset takeover, you’ll simply acquire the key assets that the company needs to run. On the other hand, equity acquisition would mean that you’re taking over a major stake in the firm’s shareholding.

Sign a Letter Of Intent

At this point, you’ll need to prepare and sign a letter of intent. This non-binding document stipulates and captures material aspects outlined as the basis of the takeover agreement moving forward. Among other things, the letter of intent includes an exclusivity clause that requires the two parties to desist from negotiating with another party.

Draft a Sales and Purchase Agreement

Having signed the letter of intent, the next step entails drafting a sale and purchase agreement. This process needs to refer to issues arising from the due diligence carried out.

Think you can go it alone? The critical nature of the process requires that you engage a lawyer. What lies ahead is even more intricate. The lawyer will handle exact sales terms, transition, work in progress, employee, and contracts, among other intricate matters that you cannot risk on your own.

Inform the Accounting and Corporate Regulatory Authority

With the sale agreement is completed successfully, you’re obligated to notify the Accounting and Corporate Regulatory Authority within 14 days. You need to inform the authority of changes in the business name, address, and newly appointed officeholders or auditors. Also, you need to inform ACRA of changes in shareholding (if any). The process is free.

Steps to a Successful Business Buy Over in Singapore

By now, you’re probably getting the hunch of buying a business. You can’t even wait to be the buyer who takes over and charts the venture to greater heights. However, there are steps you can take to enhance your success. What could they be?

Decide What You Want

Just because you’re buying a “ready” business doesn’t mean that you go in blindly. You know it’s a life-changing decision, and that calls for caution. Always check what you want and compare it with the available business for sale.

Some key factors to consider here include:

  • The location
  • Size of business
  • Niche/industry
  • Lifestyle

Research Available Businesses

I know you’re thinking Google. But wait. Consider starting the search closer home. Ask friends or owners of a business you’ve wanted to run. Check if there’s a local business that is ready to sell, and it fits your needs. From here, you can Google EbizSurf or BizBuySell. There are other Singaporean business for sale websites you can check-we’ll discuss them later in this guide.

Consider a Business Broker’s Insight

Congratulations! Now that you’ve managed to research and identify your preferred business for sale. But can you wade in and handle the risks comfortably. The best advice is to consult a business broker. These specialists will help pre-screen the venture, help you negotiate, and lead you in the right direction.

Complete Your Due Diligence

It’s understandable that you’re itching to dive headfirst into this investment. But what cannot be underestimated is due diligence. It’s your leading light throughout the process. After all, you don’t know what could be lurking beneath the veneer of a ready business that looks perfect on the surface. Additionally, consider help from an accountant, a value, and an acquisitions lawyer.

Acquire Necessary Funding

Even though you’re buying an existing business, you cannot afford it without adequate funding. If you’re super-wealthy, which is not always the case, you have the means a majority of entrepreneurs need to get the right financing. You can resort to financing sources like:

  • Seller financing-the seller allows you to make staged payments over time with interests.
  • Angel investors or venture capital-entails partnering with an investor to acquire and run the venture.
  • Business loan- it entails taking out a loan from a banker alternative lender. The credit history of the target business and your personal credit rating matter in this regard.

Sealing a Sales Agreement

After negotiating terms and getting funds all that is left is to seal the deal. Keep your lawyer closer at this point. You want a tight, no-ambiguities agreement with discreet terms and conditions before you hit the dotted line.

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What to Do After Buying Over the Business

Even after you become the new CEO in town, there are cautionary steps you need to take. They include further scrutiny of the financial accounts. It helps to catch discrepancies that you may have missed when doing due diligence. You’ll need to resolve any issue to avoid incurring penalties from the Inland Revenue Authority of Singapore (IRAS) if it requests for an audit.

Subsequently, you’ll need to oversee a smooth transition. For instance, you need to notify all stakeholders of the change in management. Make sure that you assure them of continued efficiency and fluidity despite the takeover. It’s important that you craft a new vision to scale to greater heights.

Sources That Help You Find a Business for Sale

You’ve decided to plank your hard-earned money into buying an established company. But it’s not over yet. You’ll need a defined starting pint. Not every ad on print or social media leads you to such companies. But then some sources can set you in the right direction.

Business Brokers

In Singapore, business brokers pay the role of intermediaries between buyers and sellers of private businesses. They facilitate transactions, and they always have the lowdown on ready businesses for sale.

Lawyers and Accountants

A good percentage of the work that these experts handle entails business acquisitions and mergers. They know what local or international businesses are contemplating a sale.

Bankers

Account managers, for instance, are great sources of referral. They will facilitate the sale of business since they’ll want to retain the incoming buyer as a customer.

Property Websites

There’s an abundance of websites that handle buying and selling of businesses in Singapore. All you need is to verify the authenticity of these sites and their listings.

Commercial Realtors

Commercial Property agents are in the forte of knowing which business owner is selling.

Bankruptcy Trustees

It shouldn’t sound spooky, but these trustees have inside information about insolvent businesses that want to sell for various reasons.

How to Find a Small Business for Sale

Now that you know a few sources that can lead you to an established business that fits your expertise, do you know how to find a small business for sale? Here are ways to go about it.

Call Local Businesses

If you’re looking to acquire a local business, phone call will suffice. It seems impossible, but it can assist your search. Remember, some ventures won’t advertise since they don’t want to scare customers or employees. If a local business owner isn’t selling, who knows, they might refer you.

Try Organic Social Media

Yes, social media outreach will drive you straight to a business that is selling. Leverage Facebook, LinkedIn, or Twitter. Your followers and friends won’t hesitate to notify you about a business you can buy.

Try Alternative Ads or Post Yours

You see those ads in the classified sections? The truth is that you might ignore them, but they’ll have adverts of local businesses that are up for sale.

Leverage Your Network

Even if you want to start with a small business, your network is a reliable starting point. Ask your business associates and connecting to notify you if they come across a venture that is for sale. Your network will lead you to a good deal, especially if one of them is selling.

Why Buy an Existing Business Instead of Starting Anew

Are you that entrepreneur who feels that you’ll make lousy mistakes when building a business from the ground up? Then, buying a business is your best bet. In fact, you have a solid customer base, brand reputation, and even a credit line at the bank.

For many who break out into the business world by acquisition, the reasons are countless. There are minimal risks of failure, operational formulas in place, not to mention there’s no wheel to reinvent. Still, you can leverage existing brand strength for growth in the foreseeable future.

I know the idea of being your own boss in record time is adrenalin-packed. If you’ve struggled for years looking for a million-dollar business idea in vain, you’re sure to snap up investing in an existing business. But why wouldn’t you?

The risk of taking over a ready business is significantly low. The overheads, marketing, hiring, and operating costs are comfortable numbers too. The benefits are alluring, not to mention such a business might have proprietary trademarks, patents, and trademarks that you can exploit to expand market share exponentially.

Benefits of Buying an Existing Business

Market Ready and Tested Products/Service

An existing business comes with market-tested goods and services. You already know the numbers and what customers expect.

Reduce Startup Time

A ready business comes with reduced time to market. You start earning immediately. You have available personnel, operational procedures and pre-existing customer relationships o build upon.

The Brand Is Recognised

Launching a new brand in a saturated market isn’t child play. With an existing business buy over, you can go straight into the competition. Who knows, you might have the acumen and tricks to stand out from the competition. You inherit a ready market share, and you need a little brushing to compete.

Secure Financing Easily

Already established businesses usually have a ready line of credit at the bank. After the buy over, you automatically inherit that. It reduces lender’s risk, and the account manager may not want to lose the customer.

Access a Ready Client Base

An existing business is sure to have a robust client base despite the reasons for selling. When you takeover, you don’t have to overstretch to build a new customer base.

What to Look Out for When Buying a Business

Searching for a business to buy needs to start with scrutinising what you want to achieve with such a venture. Mostly, buyers go for existing businesses that fit their lifestyle or investment objectives. The size too matters. You need to know whether you’re good at managing a huge pool of employees, or you’ll make do with a smaller one-person management outfit.

Essentially, people opt to buy a business they understand and have experience in. This is one way of reducing risks. The bottom line is, you’d need to explore your options and make a move if you have the experience in the given niche or industry.

Stop thinking about the money you’ll start making when you take over the ready business. It’s a recipe for disaster. In fact, you need to understand the need for thorough due diligence irrespective of the said venture’s allure.

So, what’s the due diligence all about? Simply, you’ll need to do your homework. The truth is that you’re about to sink a lot of money into the business. You simply don’t want to gamble. Due diligence entails scoping out the venture’s assets, liabilities, business prospects, and the like.

A checklist of things to assess when doing due diligence include:

Compliance and Good Standing

To check the target acquisition’s reputation within the industry, consider checking if it has met government compliance laws. Check whether they’re tax compliant and that they have requisite permits that can be renewed.

Financial Due Diligence

This is where you request and meticulously review the business’s financial records.  Truly, you need tis to discern the company’s cash flow status. Start with asking for audited statements dating at least three years back. You might need an accountant to help deduce financial statements, balance sheets, credit reports, general liabilities, gross profit projections, and account payables and deliverables, among others.

Assets Liabilities and Including Intellectual Property

Don’t think about acquiring a business without evaluating their assets, liabilities, and probable intellectual assets. You’ll need to know their trademarks, copyrights, and any patents lest they turn and exploit you afterward.

Vital Contracts

It pays to know the key strategies and capabilities that have led to the company’s successes in the past. This is where you review crucial agreements, including those of the top staff that the business relies on. Supplier contracts, leases, and general employment contracts should be on your radar too.

Licences and Permits

Part of the due diligence you need to do touches on licences and permits. Verify the permits needed to operate the business now and in the future. Verify whether the company may have violated regulations that might haunt you down the line.

Who Should Buy Existing Businesses?

Though buying an existing business is viable, not all entrepreneurs fit the bill. Here are types of entrepreneurs that are a good fit for ready businesses for sale.

  • Entrepreneurs who are weak at establishing businesses but they can run and scale ready ventures
  • An entrepreneur who wants to skip the hustle and grind of starting a new venture
  • An entrepreneur who can turn around failing business and optimise it for maximum profitability
  • An entrepreneur who has the capacity and expertise to take over and grow an established business
  • An entrepreneur who doesn’t want to brood a business idea but can scale an existing one
  • A dormant entrepreneur with business experience to run and keep it afloat

Selling Your Business in Singapore

To succeed when selling your Singaporean venture-big or small, some considerations come to the fore. It pays to promote your business before the eyes of willing buyers in and out of the Island State.

Still, you have to make sure that it stands out as a unique offer. Additionally, you need to spread the word through your networks and industry circles. You cannot forget to pitch your business using creative ideas, your story, and your intellectual property or innovations.

How to Sell Your Business in Singapore: Channels to Use

Selling Through Online Platforms

In Singapore, some business for sale platforms guarantee a wider audience and exposure. There are proven business for sale websites that list a variety of ventures for sale form diverse industries.

Through Business Brokers

Business brokers in Singapore play a crucial role in helping both buyer and seller to achieve their goals. These agents are well versed in the ins and outs of business sale and purchasing. They can guide you to a lucrative deal while guiding you through the pitfalls.

Selling to Your Existing Staff

Yes, your staff are potential when you want to sell your small or established business. In fact, your workers have all the skills and experience to run it after your exit. If they have the funding, you’ll be surprised at how well they can manage what you founded.

Selling Friends or Family

Who said you could not sell your business to your close circles. A good percentage of businesses for sale in Singapore end up in the hands of family and friends. Usually, the trust and convenience in such circles make the transaction and transition smooth.

How to List a Business for Sale in Singapore and Sell

You don’t want to think about it, but it pays to ponder over the day you’ll decide to list your venture for sale. If you’re business sale ready, it means you’ll go into the market in the best form to sell and maximise on the value. Where do you start?

Make It Appealing To Business Buyers

Want to sell the business fast? Make sure it has a superb profit history. Demonstrate an actual, large, and loyal client base. Show its competitive strengths, including its intellectual property rights and exclusive distributorship. Also, showcase employee skills and growth prospects.

Are You Ready To Sell?

Think before you sell. Make sure you’re ready to part with the venture financially and emotionally. Know what you’ll do with the money arising from the sale.

Check If You Need a Business Broker

You’ll definitely need one. But check whether the one you intend to call has a qualified list of prospects and a deep understanding of your business. Check their recent sales and verify whether they leverage modern technology in the process. Leverage the broker to help in:

  • Profiling buyers
  • Valuing your business
  • Packaging your business for sale
  • Creating the sales plan

List on Hot Websites

A discerning seller will see the need to list a business for sale on credible websites. Always choose a listing site that:

  • Speaks to genuine buyers
  • Is highly recognised and established
  • Specialises in listing businesses in your niche
  • Is user friendly, with helpful buyer info and tool
  • Has high-quality traffic

Create an Information Memorandum

This document summarises the nature of your business. It set out the key features, financials and, advantages of the venture. The document is informative and persuasive. It helps to motivate the buyer by capturing their interests.

Go for Targeted Advertising

You’re not selling to anybody. As such, you need to polish your ads and ensure they’re placed on the right mediums. Choose low traffic channels, and you’ll have to wait for months for a buyer to express interest. Of all, make use of social media.

Why Founders Sell Their Businesses

The common misconception surrounding the sale of a business is that something wrong must have happened. A majority will think that the company has been mismanaged, its finances are in bad shape, or the owner must have scandalised it.

But really, business founders have a federation of reasons why they put up their ventures for sale. Retirement, charting new waters, or evolving lifestyle needs may influence the sale. You and I know that at some point, you’re likely to get bored by the grind you’ve been running for the last 5-10 years.

Surprisingly, many founders want to know that the venture they so toiled to build from nothing is left in good hands. They’re always looking for a passionate entrepreneur with the knack to push the business to exponential levels.

Author Bio

Tom Koh is widely recognised as a leading SEO consultant in Asia who has worked to transform the online visibility of the leading organisations such as SingTel, Capitaland, Maybank, P&G, WWF, etc. Recently he was instrumental in consulting for a New York-based US$30B fund in an US$4Bn acquisition. Tom is a Computational Science graduate of the National University of Singapore. In his free time he performs pro-bono community work and traveling.
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