Muay Thai Recognized Globally, Drives Economy

[eemass3d]

Hi,

We are in the process of buying an existing thai business (we are a thai-foreigner married couple), and most of the initial negotiations are done by ourselves. We checked updated business registration, relevant licenses, contracts with clients and suppliers. We also checked their bank statements (3 years+) showing healthy transactions and profits.

We have decided to move forward with this deal, but can anyone suggest what other kind of due diligence should be done or if we should get a lawyer/ consultant/ accountant to do further verifications/ due diligence for us?

Can you please recommend someone who is a lawyer/ consultant/ accountant - from you personal experience for such deals?

Thanks in advance everyone.

[blackcab]

If the business is selling products rather than services then you should be checking the purchase invoices thoroughly.

Take a bar business for example. It's easy to recycle cash to make the profit look good, especially as bank books don't form part of the tax process.

On the other hand it gets more difficult to continually buy lots of surplus stock which you then have to keep moving on.

[jaapfries]

"We also checked their bank statements (3 years+) showing healthy transactions and profits." - should be a 'Red-Flag' right there: if this business is doing so well, then why are they selling it ? You most definitely should get either a CA or a lawyer (preferably a combination) to perform a basic Due Diligence. Where are you located in Thailand ?

[Gsxrnz]

Looking at their bank statement is about as useful as looking at their toilet. It will tell you absolutely nothing about the business.

If the business is registered for VAT then they should be able to provide you with full financials. If they are registered and are unwilling to provide the financials, that would be a red flag.

If they aren't registered for VAT (which is probably the case) then being a typical Thai small business, they probably have no business records whatsoever. They may be able to provide some suppliers invoices if they bothered to keep them. You may be lucky and they may have kept some sort of "daybook" which may be possible to analyse.

Otherwise it's really up to you to judge the merits of the business based on your business acumen. Asking an accountant to offer an opinion without providing any financial data whatsoever would be a sheer waste of money.

If you're sinking a good proportion of your wealth into this business venture, think long and hard about why you're buying a business in Thailand. The chances of it going pear shaped on you are extremely high. Higher still if you've never run a business before.