Buying a business abroad — how to do it right

Buying a business abroad is a very complex and rather difficult process. Whether you are an established business owner looking to enter a new market or an aspiring entrepreneur looking for a new life and new business, we offer you some tips on how to succeed in acquiring a foreign company.

Why buy a business abroad?

First of all, it is worth considering some of the reasons why you might want to buy a business in a foreign market.

1. Your preferred niche market is growing overseas but not at home

All geographic markets are different, and many industries are growing at very different rates in different countries. Some markets have reached their potential in terms of organic growth potential. Companies must innovate in order to maintain or grow their customer base as this is a relatively static market with few new leads emerging each year. Alternatively, they may acquire local competitors or expand overseas. Capturing a foreign niche at the initial stage of its development requires the ability to move quickly, but the advantage in the early stages can bring significant and long-term benefits.

2. You can take advantage of the macro and micro economic environment

If you look at Southeast Asia, for example, you can see that Cambodia and Vietnam have seen annual growth rates of over 6% over the past few years and are not expected to slow down any time soon. Millions of people are moving to urban centers and mobile payment services are booming, fueling growth in many sectors. You should also pay attention to the countries of Africa. About 1.5 billion people live on the continent, a huge resource base is concentrated — almost a third of the world's mineral reserves. And although African countries so far account for only 3% of global GDP, the economies of many of them are growing at a faster pace.

3. You buy a business and an existing team

Buying an existing business always has advantages over starting a business from scratch, and this is especially noticeable when entering a new foreign market. Success will be more likely if you are buying a business that has an established customer base. It is also a big advantage to have a team of employees who speak the local language, know the business, know the work culture and are familiar with how the business works.

4. You won't run into a lot of regulatory issues

If you're starting a business from scratch in a new country, chances are the legal framework will be foreign to you. You may find yourself in a situation where you have to spend thousands on legal fees to make sure you are not breaking any laws when starting your business. Buying an existing business gets around this problem from the start.

5. This immediately gives you access to the client base

Whoever is trying to start a business from scratch in an unfamiliar country will find that attracting a business can be one of the most difficult tasks. If you're buying a business that's doing well in terms of customer numbers, loyalty, and reputation, half the work will be done for you.

6. You don't have to create infrastructure and providers

Establishing your business in terms of establishing suppliers and the infrastructure that you will use for your daily work would be a challenging task when starting a new business overseas. However, the acquisition of an existing business solves these problems.

Tips for a successful overseas business acquisition

1. Don't forget to respect existing staff

Put yourself in the shoes of existing employees, regardless of local employment regulations, they deserve to be treated fairly when you take over as manager/owner. They will most likely be your best asset, but even if they aren't, it's possible they were mistreated by the previous owner. Or they may be loyal to the previous owner and resist change. Be careful to delicately fulfill your new role as steward.

2. Think about whether you have the necessary skills to run a successful business

Before buying a foreign business, it is necessary to conduct self-analysis. Do you have the necessary skills to further develop your business and can these skills adapt to a new country and culture? Do you have industry experience and market knowledge? Can you create synergy with an existing business? Do you have clear goals?

3. Do you know the language?

If you don't know the language, all is not lost, as you can work with translation or localization experts to make sure you hit the right note in local marketing, for example. Avoid language and localization errors at all costs!

4. Contact your local accountant and tax advisor

Once you are seriously thinking about buying a business abroad, you need to contact a local accountant who can analyze your finances and make sure that you have enough funds to cover all the costs associated with buying a business. There may be expenses that you are not aware of that you will need to set aside additional funds for. They should give you an idea of the availability of local funding sources, including bank loans. Get tax advice to learn about local tax rates for both business and you as an individual.

5. Visit the business and location in person

This is perhaps the most important thing you can do to maximize your chances of success when buying a business in a foreign market. If you don't go there yourself and check things like location, attendance, staff, facilities, buildings, and equipment, you might be in for a shock after parting with your money.

Consequently, the option of buying a ready-made business abroad is very promising and more profitable. This is a great opportunity to expand and enter the international arena. But before making such a purchase, it is worth conducting a thorough analysis and assessing all the risks and opportunities. This work should be entrusted to the appropriate specialists. One of such professional teams operating in the international market, — this is Russian-Eurasian Business Broker (REAB).