Buying an Existing Business in Thailand
Personal Research of an Existing Business
Professional Research of an Existing Business
Letter of Intent
Due Diligence
Purchase
Starting Operations
Buying a business can be a very convenient and easy way of getting started in business in Thailand. The buying and selling of businesses are quite easy but can also result in heavy personal and financial losses, if completed hastily or without proper research and legal help.
When buying a business in Thailand, many questions will need to be answered - before starting the application process; while completing the necessary documents; and when your business officially starts under new management.
H. Toosi’s advice concerning buying a business in Thailand:
If you do not have any experience in the type of business you are planning to buy, spend a few months working in a similar business to decide whether you like it.
Personal Research of an Existing Business
The first step is to research the business. This can be divided into two (2) parts: research that you can do yourself, and research for which you will need professional help ('Due Diligence').
If you plan to buy a business, spend some time researching the entity and considering the following questions …
Is it a business a foreigner can own in Thailand? Is it a seasonal or tourist-based company? Why is it being sold? Who are the customers? Will you need to speak Thai to run the business? What hours will you need to work? Will customers and clients remain loyal to your business? What does the current owner plan to do? Will employees continue to work in the entity?
H. Toosi’s advice concerning personal research on buying a business in Thailand:
Read relevant literature and use the internet for advice and information about the type of business you plan to buy.
Professional Research of an Existing Business
When you have found a business, hire a lawyer to advise you during the purchase.
Meet the owner(s) and visit the business during working hours. You need to learn how busy it is; about the work environment, the employees, and many other things that you cannot discover from documents.
Examine the financial records to determine whether the business is profitable, has paid taxes, owes money and if you can arrange a work permit if needed.
H. Toosi’s advice concerning inspecting a business and its financial records:
Watch the business for a few weeks to learn whether the owner's description of the business reflects its financial records and activity.
Letter of Intent
If you still wish to proceed following your visit or visits, you may need to let the owner know, in writing, that you are thinking of buying the business.
This letter should describe what you plan to do to research the business and give reasons why you might change your mind. To confirm your interest, it will usually include a payment, which will be refunded if the sale is not completed. The time you will need to finish this research, normally 15 to 30 days, should also be mentioned.
Due Diligence
Before you buy the business, have lawyer research the legal status of the company to answer questions such as:
Are there any legal impediments? Is the entity operating legally under Thai law? What is the firm’s financial situation? Are there any management or employee problems? What does the entity own or owe? Are there any valid contracts binding on the entity? Is the entity being sued or subject to legal proceedings? What will the owner take upon leaving?
H. Toosi’s advice concerning due diligence:
When buying a business, it is important that you are cautiously optimistic about the business and its future success. However, it is your lawyer's duty to be pessimistic and to let you know the negative points. Although listening to your lawyer's advice might result in short-term disappointment, in the long term it will save you time and money.
Purchase
Having successfully conducted due diligence and having concluded a purchase agreement, you must comply with all related provisions stated in Thai laws and regulations.
Starting Operations
When you commence operating a purchased business, you need to notify various government agencies of the relevant changes.