Buying a thai business

[simon43]

HI - I see via the Sunbelt Asia link that there are a number of existing Thai businesses for sale, (some at a very low price..)

I need to establish a Thai business and understand the need to set up a Thai limjited company etc etc - and I understand the costs involved.  But is an alternative route for me to simply buy an existing Thai business (including their limited company registration?)

I need a BKK office etc and there seems to be a number of very low-cost businesses for sale, which might offer a quicker and cheaper route to meeting Thai government requirements re company establishment etc

[Sunbelt]

Hi Simon,

90% of our buyers acquired a business as a asset purchase. The new owner transfers the assets to their corporation. We do this so many cases; we've set up a separate legal department. Our in-house lawyer has been practicing for over 15 years and has the system of registering to an art.

The reason that we recommend the buyer acquire the assets versus shares is the unknown outstanding liabilities issue and taxes. By the way, we never charge a fee for the buyer using our services on acquiring a business. We now have over 400 companies a person can acquire in Thailand.

Usually on larger complex transactions, we've had a number of share transfers. In these cases, the accounts have been audited by the big name accounting firms and the liability issue on taxes is less of a concern.

The  main reason to acquire a existing business is to put the odds of success on your side.

There are several key advantages to why...

Existing successful businesses have a proven track record of profits that will most likely continue long after the business sale. Now you get to apply your new ideas, expertise, and renewed energy to take the business to even higher profitability.

You will have established customers for immediate cash flow. No suffering through a long start-up period where you struggle to attract customers to your business. Use these customers as a building block for future business growth.

Typically, you will be able to use a business seller's financing of a lportion of the purchase price to maximize your buying potential. You will get more bang for your investment baht!

Although I do not know of any solid statistics that exist anywhere that I can quote, it has been my experience and that of my many business broker colleagues, that the vast majority of profitable businesses that are purchased continue to operate successfully for many years to come. There is no question in my mind that the success rate for new business owners that buy an existing business is much higher than for those who start a newly formed business. This makes good sense. An existing profitable business has already proven that it is successful. As long as you continue to follow the basic business approach, you too should be able to operate the business successfully.

The other senario is starting up and look for vendors, contractors, employees, etc on in a foreign language! Let someone else do the hard work!

[simon43]

OK - thanks very much for your reply, but my circumstances are a little different.  I already have a very profitable business in Europe which operates text-messaging services on some 22 mobile networks.  The operation of this business is such that it can be based anywhere in the world!  If I base it in Thailand then, as a bonus, I can also operate my services on the Thai mobile networks.

So I'm not looking to buy an existing Thai business to continue to run that business. I'm investigating whether I save on money and hassle by buying an existing Thai business and using that business as the company 'shell' for my new company.

Eg - Suppose there is an internet cafe business for sale, which has a registered Thai ltd company and an office in BKK. If I buy that business, I can acquire the ltd company (thus avoiding the need to register my own ltd company in Thailand).  I also acquire the office which I can use as an administration base.  The internet cafe function would be closed down.

Would this work?  And would there be a saving over the formation of a  new Thai company?  Of course, if all the above sounds like too much hassle then I'm quite happy to go down the 'conventional' route of setting up a new Thai ltd company....

[singa-traz]

Simon,

If you decide to register a new company in Thailand, you should investigate if it can be promoted by BOI.

http://www.boi.go.th/

http://www.boi.go.th/english/promoted_companies/index.html

As your company would be exporting services to other countries from Thailand, that  may be possible.

Anyone with more experience on this ?

[dazdaz]

Great link, thanks.  You can learn a lot from the business description and with subsequent followup, answers some questions.

It's interesting to see on the website a list of the Thai and Foreign employees.

Would be nice if they linked straight to the company website.

I noticed one in particular had investment from the British Virgin Islands.  There is a good reason for this, I just can't quite see it.

>Eg - Suppose there is an internet cafe business for sale, which has a registered Thai ltd company and an office in BKK.

If I buy that business, I can acquire the ltd company (thus avoiding the need to register my own ltd company in >Thailand).  I also acquire the office which I can use as an >administration base.  The internet cafe function would be >closed down.

What is the lThai aw of changing of company name?  You would'nt want to be stuck with any name, like "Thai Latex International".  I've done it in the UK, thats straightforward.

[sevinnow]

From my experience I believe your work permit allows you to do work only which is permitted by the registered Company you have purchased and a change of occupation you need to re-apply for a change of work permit ( sounds a little bit of a hassel ).

By starting your own Company from new you can specifiy your business requirements and if granted a Company to operate you know you have everything in place correctly and your work permit is valid.

Good Luck

Sev :blues:  

[george]

From my experience I believe your work permit allows you to do work only which is permitted by the registered Company you have purchased and a change of occupation you need to re-apply for a change of work permit ( sounds a little bit of a hassel ).

By starting your own Company from new you can specifiy your business requirements and if granted a Company to operate you know you have everything in place correctly and your work permit is valid.

 

sevinnow, exactly!!

A few other good thing to start from scratch:

1. You know that your company is "fresh", no hidden liabilites etc.

2. You can set it up with the correct share capital (2 Mil Baht per work permit) etc.

To change an existing Thai company to suite a foreigners needs (visa, tax, work permits) is more complicated than registering a new Co., Ltd from scratch.

Find a good accountant, and they will fix it. Some tips here from our friends at Indo-siam.com :

http://www.thaivisa.com/314.0.html

[Sunbelt]

I'm investigating whether I save on money and hassle by buying an existing Thai business and using that business as the company 'shell' for my new company.

Probably 59 reasons why to buy an existing business. As I said in my earler post, this however would not be one of the reasons. Because of the hidden liability. We recomend our clients to purchase the assets and goodwill and put it into a brand new corporation.

Now their are exceptions.  Such as when the business already has BOI approval or formed under the Amity Treaty or its a shell company where a foreigner can own it 100% as it was formed before 1972. Then in these cases we recomend after due diligence to transfer shares.

It's far easier to form a company in your case.  by the way, we do it as a value added service.Our fees are only 7,200 Baht plus the government charges.  

One other thing, most all Internet Cafes are not Limited Companies. They fly under the radar.  You’ll find their just Mom and Pop shops that are sole proprietors. They don't want to be in the "system."