Buying A Thai Business

[Dan75]

Has anyone got any good advice in looking to buy a business. I don't have a fortune stashed away so finance (if possible) may be needed.

[GuestHouse]

Contact Sunbelt Asia, sponsors of ThaiVisa

[Sunbelt Asia]

Contact Sunbelt Asia, sponsors of ThaiVisa

Thanks Guesthouse for thinking of us.

Has anyone got any good advice in looking to buy a business.

1. Commitment. Your commitment to own a good business at a fair price, terms consistent with the marketplace. You select Sunbelt Asia to work with you as we can introduce you to more good business opportunities than anyone.... over 800 listings are on our books in Thailand. We also have offices are in most of the expats home country. If we are successful in finding the business you like to own, our success fee is paid by the seller. Your fee is simply a smile and a "Thank you" for our professional help. We strive to have both the seller and you satisfied.

2. Disclosure. You approve the confidentiality paperwork for all the information which will be provided to you on the business we discuss.

3. Background information. You provide us with information about yourself, such as resume and financial statement. The more we know about you, the more likely we can find a business you will like, and, the more information we provide the seller, the better the terms they will consider. Your confidentiality is just as important as the confidentiality of the sellers. We will not disclose any of your information until a meeting between the seller, buyer and Sunbelt professional can be arranged.

4. Review. Your Sunbelt Asia business transfer specialist will review the businesses you are interested in and discuss the important factors of each. The key is to look at 10 different businesses and take your time.

5. Showing. You visit the businesses you are interested in and examine the important factors of each.

6. Meeting. A meeting among you, the seller and the Sunbelt Asia transfer specialist. This gives you the chance to ask detailed questions you may have about the business, and to describe your qualifications to the current owner.

7. Offer to Purchase. You submit an offer for the business you like to own. Offers are contingent upon your inspection of the books and records of the business. And the offer is not binding until you remove all contingencies.

8. Present Offer. We present your offer to the seller.

9. Background. We give to the seller, your background and financial information, experience and point of view arriving at the offering price, plus terms and conditions. Favorable background information about you will result in favorable consideration of the proposal.

10. Explanation. We carefully explain the terms and conditions of the offer to both the seller and you and the decision makers.

11. Acceptance. The seller accepts the offer as it is written or writes a counter offer.

12. Mutual Acceptance. When you and the seller agree to all terms and conditions of the sale, the offer becomes a Purchase and Sale Agreement or the basis for an agreement.

13. Inspection. Your meet with the seller to examine the financial records of the business. You do your due diligence on the business

14. Contingency Removal. when you are comfortable, you remove all contingencies in the agreement. It is now a binding contract for Purchase and Sale.

15. Form a company to acquire the assets, trade name and goodwill. You will need to have control over the company and depending on your nationality and type of business, even majority ownership.

16.Lease Assignment. We work with you and the landlord to get a new lease satisfactory for you the buyer. The key is the lease. No lease, no business.

17. Open Escrow. We provide all necessary documents to the transferring agent so they can prepare the closing papers.

18. Inventory. Arrangements are made for you and the previous owner to count and price the inventory and assets (if required).

19. Closing. All parties meet to execute the final closing documents.All parties meet to execute the final closing documents, security agreements, installment note, bill of sale and other necessary documents.

20. You obtain training with the previous owner from 2 weeks to 3 months .

Congratulations! With these steps you are now a business owner!

www.sunbeltasia.com

[Buncer]

Has anyone got any good advice in looking to buy a business. I don't have a fortune stashed away so finance (if possible) may be needed.

<{POST_SNAPBACK}>

An alternative to the traditional route of establishing a business in LOS, especially if you have'nt got money to loose would be to consider the Advergame Industry. As I've said before, the combination of Fundraising / Golf / on-line gaming is very powerful and also very timely.

If you require more specific information regarding this, drop me a line to [email protected]

[solo siam]

Im not sure the idea of people making money out of fundraising sits well with me, Im also not too sure about the Golf / Online Gaming connection - Doesnt seem to be a clear link there.

[Buncer]

Im not sure the idea of people making money out of fundraising sits well with me, Im also not too sure about the Golf / Online Gaming connection - Doesnt seem to be a clear link there.

<{POST_SNAPBACK}>

That was my initial thought too, however after researching what the possibilities were, I realised that this was a fantastic way to help charities raise funds. What we're doing is providing a platform that would be otherwise impossible for them to achieve.

I appreciate your lack of understanding....I was trying to make the point that there may be more secure ways to generate worthwhile income in LOS if a traditional business turned out not to be viable for the Poster.

[jonik]

1 - Don't start a buisness with someting you can't anything about

2 - Don't do it without money

3 - No money , no buisness.

[Doza]

I went to a networking function the other night where Greg Lange from Sunbelt spoke. While he wasn't a great speaker, the info was very interesting from them and they even had a 'case study' of a guy who bought an existing business which is going very well for him now.

When people think of a 'business in Thailand' they almost always assume they have to dream up a concept and begin a start-up. What Sunbelt pointed out is the benefits of buying an existing business with established customers / staff / suppliers / location / processes etc.

Go to Sunbelt, give yourself a few months, and wait for something intersting to come up. Don't think you have to have the cash up fromt either. There are partnerships, outside investors and lending institutions to think about.

[Sunbelt Asia]

Thanks Doza

While he wasn't a great speaker

Hey! Everyone else said I was "good!"

www.sunbeltasia.com

[Doza]

Hey Greg, you were good, just could do with some fine tuning !!!

Seriously, I enjoyed it but felt there wasn't enough detail gone into. But you were on limited time which I understand and were only a guest speaker.

Why don't you guys conduct your own 'networking' / business in Thailand evenings?

[Sunbelt Asia]

Seriously, I enjoyed it but felt there wasn't enough detail gone into. But you were on limited time which I understand and were only a guest speaker.

Had my normal 2 hour presentation crammed into 35 minutes. Talk about Fast and furious! Simply no time was allotted to go into details.

Why don't you guys conduct your own 'networking' / business in Thailand evenings?

Corporate suggests we do it 4 times a year. The last one we did ourselves was in 2003 so will make that our New Years resolution for 2006!

Thanks for coming to the event and your comments. Much appreciated.

[Daedalus]

Hi,

As many people here, I would like to buy a business in Thailand.

Don't think you have to have the cash up fromt either. There are partnerships, outside investors and lending institutions to think about.

<{POST_SNAPBACK}>

I have some funds but I think i would need more to buy THE business I would like to own.

Is there a nationality restriction in the lending process or is it open to all nationality?

With about 2 millions baht for personnal contribution, what kind of business I can expect to buy with investors? I know you need more informations about me, my professionnal background and personnal banking history, but I need just an idea, a price range...

I will contact Sunbelt Asia soon for more info, but if you can help a bit.

Thanks anyway.

[~G~]

With about 2 millions baht for personnal contribution, what kind of business I can expect to buy with investors?

Depends on what your investors will invest! 100 baht or 100 Million? And in any way, you should have a clear idea regarding the business before any investor will spend anything...

[Daedalus]

a guesthouse would be great...

[Sunbelt Asia]

With about 2 millions baht for personnal contribution, what kind of business I can expect to buy with investors? I know you need more informations about me, my professionnal background and personnal banking history, but I need just an idea, a price range...

Yes in and year out, businesses are acquired with an owners discretionary cash multiple of 2.5 times. Some cases this multiple is higher and some cases are lower. But at the end of the year, we analyze all businesses acquired and like magic, this multiple is in this area. Some years it is 2.64 times, others 2.43, 2.56 etc. Owner's Discretionary Cash is an amount equal to the sum of pretax net income, owner's compensation, interest expense, depreciation, owner's perks, extraordinary losses and discretionary expenses less extraordinary gains and income. The Owner's Discretionary Cash method is the one I would recommend because it eliminates arguments over what amount represents reasonable compensation for the owner and what amount represents true income.

Using this as a barometer, then we can state based on the past performance that the seller is claiming, the owners discretionary cash on an investment of 2 million Baht would be 800,000 Baht or 66,000 Baht a month. Doing your due diligence will determine if the past performance was indeed this number of 800,000 Baht per year for the owners discretionary cash . Then you need to remember past performance is exactly that. How you are an owner/manager will determine the future growth of the business and how it will grow from that point. The danger with rules of thumb is that people forget they're merely guidelines( not appropriate if the business has erratic earnings.) but over the years, 2.5 multiple has proven to be a a very good way to value a small business.

What type of business can you acquire for 2 million Baht? Service type business, small guesthouse, restaurant, coffeeshop, spa, school, clothing store, movie rental, Advertising Panels and Sign Boards store, Antique Shop, etc

Just go to www.sunbeltasia.com Click on "advanced search",Choose your desired Price Range of less than 2 million and this will give you an idea of what you could own with an investment of 2 million Baht.

www.sunbeltasia.com

[Daedalus]

Thanks for your reply.

I'm sorry if I insist, but is there a possibility to obtein a lend to be able to buy a business a bit more expensive?

And what amount is possible to borrow?

[Sunbelt Asia]

I'm sorry if I insist, but is there a possibility to obtein a lend to be able to buy a business a bit more expensive? 

From a bank, zero % chance without putting up land your company owns.

From Hampton in the UK, they'll lend up to 70% of any property you have in the World.

The more likely choice is owner finance. Much more normal in the Western World because of laws that protect the seller but in Thailand some sellers will do it. Just depends on how you get along with the buyer.

And what amount is possible to borrow?

In some cases I have seen up to 60% of the business was financed. More common was 70% cash and 30% as the finance.

www.lawyer.th.com

[Daedalus]

Thanks again for your patience.

Owner's Discretionary Cash is an amount equal to the sum of pretax net income, owner's compensation, interest expense, depreciation, owner's perks, extraordinary losses and discretionary expenses less extraordinary gains and income.

<{POST_SNAPBACK}>

It's a bit technical for me.

So for exemple, for me, with 2 millions bahts invested, my Owner's Discretionary Cash would be, as you said, approximately about 800K bahts a year.

But my salary as the director is-it included (owner's compensation??) ?

So if I want a salary as about 30K by month ( is-it a big one?), finally I will have about 440K at the end of the year for others expenses (800k-(12*30k)=440k) , is that right ?

Hope I'm not bothering anyone, tell me if I'm "trolling" ( it is not my intention at all )

Thanks again, your help is really welcome.

[Sunbelt Asia]

But my salary as the director is-it included (owner's compensation??) ? 

Yes. Owners Discretionary Cash is the money left that you decide where it is spendt. You can give yourself a salary of 800K per year or you could take no salary that year with the profits for the company being 800K and you then take dividends.

So if I want a salary as about 30K by month ( is-it a big one?), finally I will have about 440K at the end of the year for others expenses (800k-(12*30k)=440k) , is that right ?

The other fixed expenses have already been deducted to determined the Owners Discretionary Cash. Now what could other be expenses that are left that make up the Owners Discretionary Cash ( these expenses help a small business owner have a lower tax rate)... trip to Vegas, the owner just happen to go to a seminar as well on his "vacation" so he deducted that trip. You have no desire to go to "Vegas" or a seminar. This is Owners Discretionary Cash.

The previous Seller has a guesthouse and builds a patio. You do not need to build a new patio the next year. This is Owners Discretionary Cash.

The previous owner has a daughter in a school play and she ask him to advertise in the program... this of course, most likely was not a business decision but to help the daughter. You don't have a daughter and certainly won't be advertising in the middle schools program the next year. This is Owners Discretionary Cash.

Another way to value a business is EBITDA( earnings before interest, taxes, depreciation and amortization ) but with this method, the multiple is much higher. While an appropriate market multiple for the EBITDA method is currently 5, a mistake is to mismatch an earnings base such as EBITDA with the average market multiple for the Owner's Discretionary Cash method, which is 2 1|2 times. With EBITDA, you would deduct all expenses listed above, hence a higher multiple.

However as stated the Owners Discretionary Cash is a better method because if the seller does not take a salary, the companies earnings would be 800K while if he takes a 50K salary per month, then it would be maximum 200K EBITDA for the year and if it was 65K monthly salary, then the EBITDA is 0. Hence a argument over what amount represents reasonable compensation for the owner and what amount represents true income. Hence we use Owners Discretionary cash as every owner is different on what type of salary he'll take and you get a much better method to determine the true worth of a company.

By the way, both the Owner's Discretionary Cash method and the EBITDA method indicate values for the "operating" assets (all assets less cash, accounts receivable and nonoperating assets). In other words the operating assets are free to the buyer and are included in the price.

www.sunbeltasia.com