How to buy a business: step by step instructions + tips
Recently, many are thinking about how to buy a business. After all, the purchase of a ready-made business is characterized by a number of advantages: a sales line has already been developed, a staff has been recruited. Since the business has already worked for some time, it has a history of existence and development of the path. And on the basis of this story, conclusions can be drawn.
Но в качестве дополнительного преимущества стоит выделить наличие бренда, пользующего определенным уровнем спроса. И, конечно, вызывающего доверие со стороны клиентов. Но не стоит забывать и о подводных камнях, которые станут серьезным преткновением при совершении сделки.
Нюансы при покупке готового бизнеса
Так как покупаем мы готовый бизнес, и им является зарегистрированное предприятие с уже сформированной историей развития, необходимо ознакомиться с негативными факторами, влияющими на удачное заключение сделки. А они следующие:
- Нет уверенности в том, что настроенные технологические линии прошли модернизацию и не потребуется срочная их замена.
- Не исключено возникновение такой ситуации, что аренда помещения должна закончиться в течение ближайших нескольких дней, а продление или перезаключение договора невозможно.
- The level of full-time employees will not be high enough to carry out new tasks.
- After a period of time, it turns out that this entrepreneur has outstanding debts: loans, microloans, debts to individuals or legal entities.
- Relations with key suppliers of products have been damaged, which will subsequently complicate the conduct of activities, since it will be necessary to establish cooperation on their own.
Please note: a well-established business is sold “quietly" without too much publicity, and they are looking for customers mainly among partners, acquaintances, friends, and colleagues. That is, an ad for the sale of a ready-made, well-established business that does not have any current problems is extremely difficult to find on the Internet, or they ask for a large amount for it.
Before making a final decision for yourself, find out the reason for selling the business:
- The owner of the enterprise moves to another country, city, and it is difficult to follow the business from there. And this means that there will be no control over work processes, this will not be allowed by any owner of the company.
- The emergence of controversial issues that arose between the founders without the desire to find a compromise. There are a lot of such situations when a conflict flares up between competitors, and it is impossible to find a single worthy option on how to sell the company.
- Loss of interest in activities, desire to do something else. This behavior is fully justified by the implementation of the business
- A serious illness, in connection with which the entrepreneur is forced to organize the sale of the business.
- A large amount of money was urgently needed to solve urgent financial problems.
You can also add to this list: inability to cope with a leadership role, unprofitability of the chosen direction, getting rid of non-core assets (typical for large companies).
How not to miss danger signals
Before you buy a ready-made business, consider the decision. Conduct a preliminary financial analysis of the investment object, weigh the advantages and disadvantages. You can engage in complex monitoring yourself or seek help from specialists – analytical offices.
In addition, it is worth paying attention to situations that may be fraught with dangers for the implementation of the planned project:
- The seller insists on the urgent conclusion of the transaction on a specific day. For example, tomorrow.
- Basic information of a legal or financial nature is hidden.
- The true reason for the sale of the business is not voiced, or the arguments given do not sound so convincing.
- Distorted information was presented, which has enormous differences from reality.
Therefore, before concluding a deal, it is worth doing a total check of the seller and his business before the contract is drawn up.
Big risks can hide among competitors. Therefore, first of all, it is necessary to analyze them, to identify brands with the greatest potential. In the future, this will help lead the business to a worthy promising future. The location of the company is an additional risk. If it is located at a great distance from customers and it is extremely difficult to get to it, the next step after the conclusion of the transaction will be moving. Since this is a financially expensive undertaking, it is worth either insisting on a discount that could cover the costs, or refusing to conclude a deal.
It is important to remember that the estimated risks can only be assessed on the basis of existing documents. Because reviews and oral statements in the safety of the object of financial investment will not help here. After checking the documentation for legal purity, it will be possible to make sure that we are buying a business for which there will be no need to be afraid. And at the same time, worry about the sudden collapse of the assigned plans.
To protect yourself from debt obligations that were not identified during the verification and oral conversation with the seller, it is worth signing an additional agreement. The essence of such an act is that this entrepreneur (seller) guarantees the absence of debt obligations. And, if any are found out, the company will not suffer from this. Responsibility for concealing information will be borne by the previous owner of the company.
Please note that the additional agreement must be signed by all founders. Including the CEO. Because otherwise the contract will not have any legal force.
Documentation of the transaction
The contract of sale is the main document when concluding a transaction. Write down the following details:
- The object of the transaction, the transfer of all participants from the composition of sellers and buyers, voicing the final cost of the organization.
- The presence or absence of debt. If there are debts, they should be described in detail: who owes whom and in what amount. You should also indicate which of them the new owner is ready to take on, and how it is generally planned to resolve this issue.
- Factors that can have a significant impact on the cost between the signing of the agreement and after the conclusion of the transaction.
- Warranty additional obligation from the previous owner, confirming the accuracy of the information provided about the enterprise.
- Indication of the amount of the fine and other measures of influence in case of violation of the agreements reached.
- The amount of the deposit from the buyer.
At the end of the document, you must indicate today’s date and put signatures: the founders, the general director, the buyer. If a lawyer was present at the execution of this act, signing, he confirms the legal purity of the transaction, and that everything is drawn up correctly.
A business registered as an "LLC" can be acquired in any of the following ways:
- Become a member of the founders with the subsequent alienation of the share and the exit of the former owner from it.
- Organize the bankruptcy procedure with further liquidation of the organization and buyout at open auction. But there is a big risk here, during the auction a competitor may appear who will be able to offer a price several times higher than the established value.
The first option is considered the most optimal. Because you can buy a business, registered as an "LLC", you can register as a new member according to a simplified scheme.
How this process happens:
- Draw up an application in the form P13001, certify in a notary company.
- The decision of the founders to increase the management of the company.
- In 2 copies, an updated version of the Charter of the company.
- Check for payment of state duty.
- An extract from the Bank confirming that the amount has been paid in full to the MC by the new participant.
To accompany the transaction by a notary, it will be necessary to prepare a contract of sale and offers of participants.
It should be noted that the stages of the transaction are notarized in the presence of the seller and the buyer.
Step-by-step instructions for buying a ready-made business
Since it is very difficult to buy a business without proper preparation for this process, we recommend that you familiarize yourself with the ready-made step-by-step instructions. Consists of the following items:
- Assessment of business prospects. Conduct an assessment of the investment object, analyze the profitability of the niche, competitiveness. The current owner must provide the necessary certificates at the request of the buyer. With a lack of legal knowledge, it is better to enlist the support of a specialist you can rely on. It is advisable to contact specialized companies, and not individuals.
- Choosing how to transfer ownership of the business. Assess the pros and cons of ways to transfer such a right, as well as determine the timing of the transaction, the total number of participants in the "Limited Liability Company".
- Contacting the tax office. If the notary participated in the support of the transaction, an additional point can be the submission of documents by him, without the direct participation of the seller and the buyer. Otherwise, the execution of this action falls on the CEO.
- Receiving a sheet with the changes made from the Unified State Register of Legal Entities, the original must be certified by an updated version of the charter. This is done through a personal visit, or by sending an application by mail with a mark of urgent delivery to the addressee.
- Notification of a change in the management of the organization. Written notifications are sent to banking structures, counterparties and other members with whom close cooperation has been established.
Registration will take 1-1.5 months. If there is no time to do this on your own, draw up a written power of attorney for another person who will be ready to take responsibility. But it is also necessary to certify with the seal of a notary, prescribing the functions of a trustee.
Buying a business with shares is much more profitable, because in this case the tax rate of 18% does not apply, because the seller is a legal entity. The acquisition of an entire organization, no one is exempt from paying tax. Since it is difficult to buy a share in a ready-made business without knowing the specific nuances and subtleties, we recommend that you read the step-by-step instructions.
Before making a decision to conclude a deal, make sure that there are no debts to creditors and other financial obligations to the structures. If the entrepreneur is in debt, the Bank will be forced to initiate bankruptcy proceedings, and then the purchase of a share will become a loss-making process. In addition, it is recommended to organize a total check of the legal and economic component in business. It is advisable to contact an independent company of experts who will audit the financial statements and the regulatory framework of the organization.
Buying a stake in a business must be carefully planned and thought out. In order for everything to go perfectly, it is worth determining the method of managing the company – majority or minority. It is important to realize that with minority ownership of shares, you will not be able to influence the decisions of higher officials. Most of the important issues are considered without the involvement of minority shareholders, including the payment of dividends. Therefore, the cost of a minority stake is low.
To buy a share, you have to follow the following procedure:
- Study and analyze the company’s documentation for full compliance with the legislative and legal standards of the state. First of all, you should start by studying the rules for the transfer or assignment of securities to the buyer. Please note that the Charter of the company should contain a rule on the sale of shares only to members of the Company. Thus, the possibility of the presence of unauthorized citizens is excluded.
- Registration of the act of receiving a share. There are signatures of the parties, including a notary. Subsequently, it is sent for state registration to the Rosreestr.
- Submit an application to the Unified State Register of Legal Entities along with certified certificates for registering a share in the business.
If you submit documents that do not have a notary seal, they will not have legal force, and then the process will have to be repeated, and this is an additional waste of personal time. So you should carefully consider the implementation of each step from the attached instructions.
To clearly understand the situations in which the sale of a share is allowed, it is necessary to rely on the regulatory framework. To avoid possible problems, it is worth using the services of a lawyer. Then you can count on a legally competent execution of the transaction.
At the initial stage, a total check of the statutory documentation is carried out for the presence of a clause prohibiting the sale of shares of the company to other entities that are not the founders of this company. In the absence of such a prohibition, the conditions of purchase are equal for the buyer and seller, other existing owners. And note that if the parties to the transaction are married, one of the spouses must give permission for the transaction to take place. Because without this, even the initiation of the process itself is impossible, it will be easy to invalidate it in court.
If a share is bought by a legal entity, in this case permission will also be required, but from a representative of the company and from the Federal Antimonopoly Service. If early transactions are identified, it is worth making sure that they were carried out in accordance with the regulatory framework.
Each sale and purchase transaction has nuances of conduct, and primarily depends on the form of ownership of shares.
Initially, you will need a contract for the sale and purchase transaction, and certify with a notary seal. Then proceed to the preparation of the main package of certificates, the full list will be provided by the notary. And after that comes the day of the transaction, the agreement fixes the amount of purchase of the share by the buyer, the terms for the transfer of rights and money, this is fixed by the signatures of the parties. The notary undertakes to transfer the certificates to the tax office within 3 days. But most of the time it’s even faster.
If it is necessary to include an additional clause in the contract, contact the notary company in which the registration took place. Most people believe in advertising, and such a service as registration of the purchase and sale of shares through the authorized capital, such a transaction is not reliable and not universal. That is, it will not work in every case. Therefore, it is worth getting advice from a certified specialist, and not trusting unreliable sources of information.
In this case, there is no need for paperwork. Just make the appropriate entries in the registry, which records shareholders. Because it makes no sense to add extra steps to it.
Stages of sale of shares:
- Opening a bank account for the buyer.
- Signing the contract of sale by each participant in the process. It is by no means necessary to contact a notary office.
- Census of securities in the registry department in the name of the new owner of the share.
Since it is not difficult to get a share in a ready-made business from a JSC, this method is the most convenient. But in practice there are situations when a person needs to acquire only a part of the business – a trademark or other assets. You can conduct a deal in such a way that only assets and nothing more will act in the contract. If additional sales are expected – the client base, the formed staff, it will be easier to initiate business restructuring.
Since each business has many nuances and specific subtleties that can subsequently complicate entrepreneurial activity, it is worth familiarizing yourself with the rules in order to avoid possible risks.
So what needs to be done:
- Read the terms of sale. Pay attention to the point where the rules for conducting financial transactions for the purchase of a share in the company are prescribed. Because you can’t miss this at all.
- The data presented in the testimonies are compared with real information. First of all, here it is worth implying a check of material values. This includes: the equipment of the organization, bank accounts, the condition of the immovable object and the rest that relates to material value.
- Obligations of the company – receipts, loans, etc.
- affiliated components. Here you need to make sure that the business is a formed structure that generates income, or the company is controlled by another organization. Since such a check is difficult to carry out on your own, you should contact another company.
- The reputation of an enterprise is also of fundamental importance when buying a share. You can find out the necessary information from competitors, through reviews on the official page of the company and use other methods.
Please note that the CEO or other persons will not share negative experiences, and will hide. Therefore, it is worth carefully checking the reputation of the business in which you plan to acquire a stake.
Getting a share in a business is extremely difficult, as advertised. It should be understood that along with securities, the obligations of the testator and the right to vote pass to the heir. But in order to enter into inheritance law, at least 6 months must pass. Then you need to contact the notary’s office to obtain a certificate of acceptance of the inheritance. While time will go by, the course of business can only be observed from the outside. Because the heir has no evidence.
The main difficulty is that the Articles of Association of the company may contain a clause stating that shares are not inherited. But the heir will receive compensation, that is, a payment equivalent to the value of the share. If the firm is liquidated within these 6 months, the payment is also provided.
This article consecrates the points on how to buy a ready-made business, share and enter into an inheritance. With insufficient legal literacy, it is worth getting advice from a certified lawyer.