Business Buying

[roadking95]

Morning all

I have just become a member of this site and find the information to be of a great help, especially when you are entertaining the thought of moving there. My question is this, I have been searching sites in relation to businesses and property to purchase, I have noticed a lot of bars and guesthouses for sale, why. Is there a living to be made out of such businesses, I dont live in a fantasy world and dont think that I will come to Thailand and make bucket loads of money.

I have a partner in my brother and we are prepared to put in a substantial amount to purchase a decent business and enough to cover ourselves for any unforseen problems that can arise. We will be leaving the bulk of our money here in Australia, which we can call on at any time. I think along the lines of lifestyle and different cultures for the move, I can make more money by staying here in Oz but I am more interested in a change. I have been to Pattaya before and have seen the lifestyle which looks very good, I am returning in Feb 07 and will do some ground work in regards to property and business. I would be interested in the other posters thoughts and the pluses and negatives of doing business there, I have been in business here in Oz so I have some idea in regards to trading in a business.

Thanks in advance for any help.

Steve

[Chang_paarp]

Mate

Spend some time reading this section of this forum. You will find a wealth of information, and the answer to many of your questions.

There are a number of reasons business are for sale;

1. Not making money
   
2. Business partners disagreement.
   
3. A sudden need to return to home country / provence.
   
4. Sudden need to get out of town.
   
5. Need for a change.
   
6. Wrong business for the current owner to be in.
   

Your plan to spend some time in LOS is well advised, as business is not always done the same way it is in Au. You will need to develop some new networks to make your business successful. I would recommend that you invest 3 months of your time before you invest any money. Just remember that you have 2 eyes, 2 ears and one mouth, while you are researching your investment that is the proportions you should use them.

One other thing to keep in mind is that there is no consumer protection for business transactions, so cover your rump with a good team of legal and financial advisers that are familiar with the local laws, regulations and business practices.

[Hublet]

DONT DONT DONT

After living and working in Thailand (legally) for two years I have just lost everything - my business, my lease and now I have a 2 mill baht company worth nothing. This was courtesy of an unethical con artist of a Real estate business in Hua Hin.

[roadking95]

DONT DONT DONT

After living and working in Thailand (legally) for two years I have just lost everything - my business, my lease and now I have a 2 mill baht company worth nothing. This was courtesy of an unethical con artist of a Real estate business in Hua Hin.

[roadking95]

DONT DONT DONT

After living and working in Thailand (legally) for two years I have just lost everything - my business, my lease and now I have a 2 mill baht company worth nothing. This was courtesy of an unethical con artist of a Real estate business in Hua Hin.

Do you mind to elaborate on how this happened, were there no warning signs. Sorry to hear of your loss.

Steve

[Sunbelt Asia]

Steve

I have noticed a lot of bars and guesthouses for sale, why. Is there a living to be made out of such businesses,

Some do make a living and some don't. Just depends. The main deciding factor is the location and management.

Many people do not do due diligence. Example: A guy walks into our office yesterday; he wants to buy 86% of a bar for 31.5 million Baht. Already has given 500,000 via bank wire and 500,000 more was given in cash that morning with no receipt.

Told him to run away from the deal. No matter how airtight the contract our lawyers would write. He would lose. I knew the history of the seller on a previous deal that a friend had us look at, AFTER He invested. This seller in the old case stated the shares were the management company of the bar. That another company owned the lease and assets. He had the shares but as the bar stopped using the assets and was a new lease, the company was worthless.

Told this guy that walked in, the only way, we would ever represent him was if the sale was an asset purchase and the company that he controlled would have the lease.

We gave him the due diligence sheet to give the sellers lawyer. He glanced at it and said "we need to close on this. My risk is the Seller won't sign the purchase agreement" "Why" we ask. He responds " As the lease is in the seller’s wife's name, you will never allow that and if you insist, the seller will not allow it!"

This guy did not even have an offer to purchase. This guy is going to lose. I brought in other people to tell him the same, run away unless you can buy the assets, not the shares. Again he said the seller would not sell the assets, just the shares. His risk was not getting the bar he always wanted. I'm positive he has gone with another firm to represent him as he has not called back.

Another case this week. Person signs a contract as the buyer of the company. He is not even a director. Was going to invest 22 million in two plots of beach front land of 109 sq. wah. He has a contract but it’s worthless.

The Land has a servitude! Meaning that the land is practically worthless. Someone else has the right to be the "Landlord" for their lifetime and live there not the Seller or who the land is sold to. The contract even states there is SERVITUDE on this land!

The Seller in the contract is not even on the title deed. Someone else is even the seller.

The buyer is not the representative buyer as he stated. He’s not even on the company as the director.

Only one plot of 109 sq. wah is mention in the contract not the two he was buying

He was told the plot closest to the beach would be a garden. He buys the next two plots. Logic would state the "garden" plot would be the easiest to sell and why he was told this. No mention in the contract that the "garden" plot would always be a garden and nothing built to block his view. He hires a private detective. They offer to sell him the “garden” plot. Sends 12 different people in, they all were told the garden plot was for sale. The reason he came to us now, as someone told him the "garden plot" was for sale and the private detective confirmed it

His boyfriend admits getting one million Baht to talk him into buying the two plots. The "buyer" then is so happy that his boyfriend is honest and so clever. Not a typo, “ happy” not angry.

He already gave 2.2 million Baht deposit before he hire us to do due diligence. He now is being told he will lose. We of course have something to say about that!

Another case:

We are hired to due diligence on Wednesday. We are told to negotiate with the seller. The sellers name is no where to be on the title deed. Were told it’s a government error by the “seller”.

When we tell the buyer,

“I really want this house. Negotiate with her. For sure she is the owner."

"How do you know?" our lawyer asked.

" She told me!"

Seems like lots of Monopoly money floating around here. I could go on and on. Of course there are good deals, many. But the people that arrive throwing around monopoly money is mind-boggling.

Disclaimer: This sample due diligence list IS NOT TO BE USED AS AN ACTUAL DUE DILIGENCE LIST, its purpose is to act as a guide in creating a due diligence list for acquisition of a particular business. Your attorney or accountant can provide you with additional suggestions.

A. GENERAL INFORMATION

Review organization chart and other information regarding structure of the Company, including subsidiaries and other affiliates, % ownership and jurisdiction of each organization.

Review list of officers, directors and key management/supervisory personnel with appropriate background information regarding credentials.

Review summary of number of employees with relevant information, by functional group (Sales, Marketing, R&D, G&A, etc.) with approximate total wage/salary cost of each category.

B. ORGANIZATIONAL MATTERS

Review all corporate charter documents and by-laws (including all amendments to date), if applicable, of the Company and any other corporation, partnership or other entity in which the Company has an equity interest, which relates to any business of the Company (an "affiliate"). Check for any unusual clauses, preemptive rights, cumulative voting, special majority and quorum requirements.

Review any authorization necessary to transact business in foreign jurisdictions (if applicable).

Review all minutes of meetings of boards of directors, committees (including executive and finance), and shareholders for the past five years.

Review all stock transfer and certificate books, ledgers and records of the Company. For each class of stock, review listing of current shareholders indicating name, number of share owned and special restrictions (if any).

For each class of stock review listing of holders of options, warrants, rights, etc. indicating related terms (issue date, exercise date and price, vesting, etc.). Also, review copies of form of warrant, option, right agreement, etc.

Review agreements relating to the purchase, sale or issuance of securities, including any warrants or options.

Review all agreements under which any person has registration rights for any securities of or preemptive rights for shares of capital stock of the Company.

Review information on any treasury stock acquisition or any obligation to issue or repurchase shares.

For each class of debt, review listing of debt holders.

Review details regarding all voting agreements, voting trusts and proxies relating to capital stock of the Company.

Review listing and appropriate details regarding investments in other corporations or entities.

Review information regarding all corporate and fictitious names used by the Company and any predecessors in the past five years.

Review names, addresses, and contacts of Company's professional advisors, including attorneys, auditors, lenders and investment bankers.

C. LITIGATION

Review copies of the legal representation letters sent to the Company's auditors with Company responses, for the past five years. Review a summary of all litigation or arbitration, claims and proceedings (whether pending or threatened), to include worker's compensation actions, in which the Company or any affiliate or any officer or director of the Company is a party. Include a brief description of the following:

Parties

Nature of proceeding

Date commenced

Amount of damages and/or other relief sought

Name of firm and attorneys representing Company or affiliate

Get a legal opinion on the assessment of likely outcome

Review all litigation files relating to any pending or threatened legal proceedings in which the company, affiliate, officer or director is a party.

Review all consent decrees, injunctions, judgments, other decrees or orders, settlement agreements, and other agreements to which the Company is bound, that require the payment of money by the Company or prohibit any activity by the Company.

Review reports, files, significant correspondence and documentation relating to any investigation or proceedings by any governmental regulatory agency in respect to the Company.

Review a summary of any ongoing tax disputes between the Company and the taxing authority, and any foreign jurisdiction or foreign taxing authority.

Review information regarding in-house counsel to the Company, including legal representation, coordination with outside counsel, etc. Review addresses and contacts of all outside law firms.

Review any charges that may be pending against the Company by any federal or state agency regulatory body or agency.

Review relevant information in the event that the Company's officers, directors or employees that have been involved in criminal proceedings regulatory commission violations or significant civil court litigation.

Review, if any, legal problems that competitors have experienced, and if such problems will eventually confront the Company.

Review any international legal issues.

D. REGULATIONS AND PERMITS

Confirm the Company is in compliance with environmental, equal opportunity employment, OSHA requirements or other regulations specific to the industry. If not, determine what compliance will cost.

Review whether there are products that need governmental review and approval. If so, determine the current stage of the approval process.

Review copies of all governmental licenses and permits required for the Company's business as currently conducted or planned (except environmental permits as covered above.)

Determine which governmental regulations might impact the Company's business either domestically or in foreign countries.

E. INTELLECTUAL PROPERTY

Review patents held and applications made by the Company and all related material correspondence and documentation (including file wrapper).

Review trademarks held and applications made by the Company and all related material correspondence and documentation.

Review copyrights held and applications made by the Company and all related material correspondence and documentation.

Review design and model rights held and applications made by the Company.

Review trade names used by the Company.

Review licenses for any form of intellectual property held by or granted by the Company.

Determine any pending or threatened infringement claims by or against the Company, and copies of any such claims for the last five years.

Determine any important know how at the Company's disposal.

F. FINANCIAL AND ACCOUNTING MATTERS

Review, audited if available, financial statements and other financial documents of the Company and any affiliates for the past three fiscal years. Including (where applicable):

Comparative financial results by major divisions

Detailed breakdown of sales and costs

Detailed breakdown of general and administrative expenses

Detailed breakdown of selling and marketing expenses

Detailed breakdown of working capital accounts

Detailed breakdown of fixed assets

Depreciation and capital expenditures (with particular emphasis on capitalized software development expenses, if applicable)

Tax returns, IRS reports or correspondence

Review the following, if applicable:

Chart of accounts and a description of accounting practices.

Accounting procedure manuals and location and nature of accounting records.

Determine if any seasonal bank borrowings are required.

Determine any foreign exchange requirements, procedures for hedging and value of transactions done in foreign currency.

If applicable, procure the name and address of auditors of Company and any prior auditors (including date of appointments, duration, remuneration).

If applicable, procure accountants' management control letters concerning the Company and any responses by the Company for the past five years.

If applicable, review all audit documentation, papers and communications between the Company and its auditors, other consultants or the IRS and any internal audit reports.If applicable, review all documentation relating to material write-downs or write-offs by the Company of notes or accounts receivable or inventories, other than in the ordinary course of business.

G. RECEIVABLES

For accounts receivable, review:

Analysis of total receivables due from customers, officers, employees and others

Aged trial balance of receivable accounts above; compare them to aging percentages for previous years and determine any trends, seasonality, etc.

Terms of sale

Number of customers

Names of large customers and amount of annual sales to each by product line; determine any special arrangements with any of these customers

Credit policies and comment on the effectiveness of credit department and significance of credit limits

Turnover data

Determine collectibility of receivables and adequacy of loss reserves.

Determine if receivables are discounted or pledged as collateral for borrowings.

H. LIABILITIES

Determine if any assets are pledged as collateral.

Determine if the Company's is in compliance with loan covenants.

Review details about all financial liabilities, recorded or contingent, including the general terms of all notes, bonds and mortgages with particular reference to personal guarantees and accelerated maturity upon change of control.

Determine contingent liabilities such as:

Contracts and agreements

Price re-determination or renegotiations

Sales subject to service and warranty guarantees

Product liability

Unfunded past service costs of pension plans or unfunded retirement benefits.

With respect to accounts payable, review an analysis of payables by type (vendor, taxes, payroll, etc.) and determine payment practices for each.

I. BUDGETS AND FORECASTS

Determine the budgeting process, including capital budgeting, if applicable.

For each of the next three years (calendar or fiscal years ended), determine consolidated projections and separate business unit projections, on a quarterly basis, including:

Income statements, balance sheets and cash flow statements

Underlying assumptions including product/service introductions, market size, market share, pricing, volumes, discounts, ramp-up costs, etc.

Underlying assumptions for all major expense and capital expenditures, particularly R&D software development.

Determine the amortization policy for any prepaid expenses or deferred charges.

Determine how goodwill or other intangibles arose and how they are being amortized. Determine any issues regarding the "going concern value".

Review details regarding the important metrics which management uses to run the Company (capacity utilization, sales per person, bench time, etc.). Review comparisons of these metrics for the past three years.

Determine how the Company's metrics compare with the industry in general, and with peers/competitors.

J. TAXES

Review all tax returns or copies of extensions of time within which to file such reports filed by the Company with the Revenue Service, and any foreign jurisdiction or taxing authority, for at least the past three fiscal years, and any years prior there to that remain open and subject to review by the taxing authority. If applicable, review copies of all audit, determination and other correspondence pertaining thereto.

Review copies of all tax-sharing and other tax-related agreements.

Review all information related to any audit of any return or report filed by or on behalf of the Company for the last three fiscal years, and any pending audits for any prior periods that could affect the tax liability, credits or other tax attributes of the Company.

Review a schedule describing any ongoing tax disputes, together with copies of revenue agents' reports, correspondence, etc., with respect to any pending federal, state, provincial or similar tax proceedings, with regard to open years or items relating to the Company.

Review detailed reconciliations of the Company's effective tax rate for the past three years. Review an analysis of any deferred taxes.

Review schedules reconciling book income to taxable income for the last three years.

Review detail of the amounts and expirations of any carry-overs of net operating or capital losses, investment tax credits, foreign tax credits and other tax credit carryovers. Determine the tax basis for the Company's assets.

K. MATERIAL AGREEMENTS AND DOCUMENTATION

Review all documentation relating to real property owned or leased by the Company (including, without limitation thereto, purchase agreements, leases, title policies, title reports, surveys, easements, rights of way, licenses and deeds). Note: for real property, title reports and surveys are especially important.

Review information regarding all mortgages and other security documents relating to any of the properties or assets (real or personal) of the Company.

Review all contracts with dealers, distributors, agents and others.

Review general sales conditions of the Company; model contracts, orders and invoices.

Review the form of product warranties of the Company.

Review general description of warranty claims during the last three years, and determine significant or unusual claims.

Review all contracts and agreements relating to the Company to which any officer, director, employee or stockholder of the Company is a party or in which any officer, director, employee or stockholder of the Company has an interest including secrecy, confidentiality, nondisclosure, assignment of inventions and non-compete agreements.

Review all equipment leases (operating or capitalized) to which the Company is a party or is bound or in which the Company has an interest.

Review all agreements and contracts concerning any acquisition or disposition in the past five years by the Company of any substantial properties or assets, whether real or personal, outside the ordinary course of business. Review all documents and agreements relating to any merger, consolidation or corporate division in the past five years in which the Company was a party or the surviving corporation.

Review all loan agreements, guarantees, indentures, promissory notes, debentures, line of credit and related documentation in connection with any loan or other indebtedness of the Company.

Review all loan agreements, guarantees, indentures, promissory notes, debentures, line of credit and related documentation in connection with any advances or loans made by the Company to an officer, director, employee or shareholder of the Company.

Review all license and royalty agreements to which the Company is a party or in which the Company has an interest.

Review all agreements and contracts between the Company and any affiliate including, without limitation thereto, any royalty and license agreements.

Review all sales, marketing and distribution agreements to which the Company is a party or by which it is bound (including documentation with any brokers and other independent sales persons or entities).

Review all contracts and agreements with suppliers of services, raw materials, finished or semi-finished materials, or products of the Company.

Review all standard forms of purchase orders, sales orders, supply contract, service contracts and sales contracts used by the Company.

Review all agreements to which the Company is a party or by which it is bound, for the delivery, manufacture or supply of goods or services.

Review any other particular agreements based on Company business.

Review government contracts and subcontracts, if any.

Review all evidences of inter-company debt.

Review all insurance policies, and a claims history and any correspondence between the Company and the insurer.

Review all certificates of insurance (casualty, property, liability, errors and omissions, officer and director, etc.).

Determine if coverage has changed during the past three years.

Review any other contracts, agreements or documents material to the business of the Company or any affiliate including management service and tax sharing agreements, performance guarantees, bonds and indemnification agreements, noncompete and confidentiality agreements.

Review any contracts with independent or self-employed consultants.

L. SALES AND MARKETING

Determine how potential customers are identified.

Review and determine detail regarding the average dollar sale and time requirements to close a sale. Call customer references.

Review a list of the top 10 customers for each major business segment and determine the total sales for the past three fiscal years.

Review a list of the top 10 suppliers.

Review samples/copies of all product brochures, marketing materials, promotions and advertisements.

Review the sales pipeline process and determine the current sales backlog.

Review the Company's major type of customers for each major segment - by type of business, domestic vs. foreign or other classification you deem relevant. Determine if the profile of future customers will change.

Review the tenure of the average customer, including whether there are continuing contracts with customers. Determine whether special terms are offered to significant customers.

With particular emphasis on new products/services, determine future product/service trends addressing projected marketplace, features, cost, technical aspects and competition.

For each major business segment, review market share information and trends.

Review the sales and distribution strategy for domestic sales and for foreign sales (if applicable) by market segment and product line.

Review distribution channels/resources (personnel, OEM's, distributors, VAR's, systems integrators, etc.) by name, address, dollar sales, percentage of total sales and commission percentage.

For each major business segment, review a sales breakdown (dollars and percent) by distribution channel.

Review detailed information with respect to service and support.

Determine whether future changes in sales or distribution strategies are required.

Review any cyclical factors or seasonal factors with respect to the sale of the Company's products and services.

Review the Customer Support and Service organization, including:

Functions

Personnel

Pre-sales and technical support

Post-sales assistance

Compliance resolutions

Review information on complaints, efficiency and effectiveness of service/support function.

Determine whether any support activities are billed to customers, on what basis, and if this is treated as cost recovery or a profit center.

Determine any significant quality problems within the past 36 months and describe problems or returns by product line.

With respect to competition, for each major business segment review the following information:

Determine each major competitor (size, products, profitability, financial strength, organization, etc.). Evaluate each of the competitor's strengths and weaknesses in each product line.

Review any significant price, cost effectiveness or the technical differentials among competing products to present an anticipated competitive market share.

Review the most frequent basis of competition (price, quality, features, etc.) to other factors such as number of suppliers, methods of distribution, etc. that shed light on the nature and strength of competition.

M. INSURANCE

Review information with respect to self-insurance, if any.

Review information with respect to past loss and claims experience.

Review information concerning whether a change in control will cause additional cost for Workers Compensation Insurance, unemployment insurance or other insurance.

Determine if there are any unusual risks, products or events that the Company has been unable to insure.

Determine if any insurance is written on a "claims made" basis.

Review information concerning the Company's reporting and reserving practices.

Determine if any insurance policy aggregates have been penetrated or exhausted.

Review who in the Company is responsible for risk management and insurance.

N. EMPLOYEE, DEFERRED COMPENSATION AND BENEFITS MATTERS

Review all collective bargaining and labor agreements to which the Company is a party or is bound. Review a list of all officers and key employees of the Company, together with the following information on, each officer or employee:

(a) salary; ( previous five years of employment history; and © description of present duties and responsibilities.

Determine if there are any management perquisites or other arrangements, other than those listed in items below, to include, without limitation thereto, any bonus plans or other incentive compensation arrangements maintained by the Company.

Review any stock option or other stock appreciation, phantom stock and other similar plan maintained by the Company.

Review all employee benefit plans, trusts, determination letters, IRS filings (including tax returns), filings and actuarial reports relating to any deferred compensation arrangement to which the Company is a party or by which the Company is bound.

Review all documentation relating to any severance arrangement between the Company and any employee, officer, director or consultant of the Company.

Review all documentation relating to any welfare benefit plan, health insurance, disability insurance, life insurance or other benefits given to employees, officers, directors or consultants of the Company.

Review any employment contracts of the Company, for each category of employees, and indication of any difference for individual employees. Review all individual employment contracts.

Review all standard agreements of the Company which employees are required to sign, including:

Confidentiality agreements

Invention assignment agreements

Conflict of interest declarations

Non competition agreements

Review all significant correspondence with labor and social security authorities for last three years.

Review any contracts with independent or self-employed consultants.

Review any agreements currently in effect between the Company and any former officer, director or employee.

Review any liability for termination payments to employees.

Review all brochures, information, booklets, policies and procedures manuals, internal regulations, or other written material given to employees or potential employees of the Company to acquaint them with the Company's business and with services, compensation and benefits offered to employees.

Determine if there are any labor concerns, including whether any strikes are threatened or pending, all current disputes and negotiations.

Review all correspondence with labor unions and all memoranda regarding communication with such labor unions or union employees.

Review the history for the last three years of any union negotiations, number of employees, turnover, absentee rates, and distribution.

Review any current compensation plans, including incentives and deferred compensation plans, with particular attention to the ten highest compensated employees.

Review all employment non-compete and other agreements or contracts with any employee.

Review any current proceedings before any State or Federal labor agency.

Review the Company's Code of Conduct Manual or other personnel manual and determine if procedures exist to monitor compliance with these policies.

Determine if any key management positions are currently vacant.

Review information with respect to the Company's compliance with the Foreign Corrupt Practices Act.

Determine general working conditions, employee morale, and turnover.

Review the Company's policies for severance, vacations, holidays, leaves of absence, sick days, personal days, and other similar programs.

Determine the extent to which the Company Reviews post-retirement medical or other benefits, including the current liability with respect to such benefits and what it is projected to be in the future.

Determine whether any officers or directors been involved in criminal proceedings, regulatory commission violations, or major civil litigation.

Review information with respect to any recent key personnel losses to competitors.

Review the Company's process for recruiting new employees.

Review any past or contemplated closings/layoffs and associated costs.

O. ENVIRONMENTAL MATTERS

Review all environmental litigation or proceedings currently involving the Company, including claims, amounts, names of counsel and assessment of likely outcomes.

Review a general overview of environmental legislation and requirements in the Company's jurisdiction relating to the Company's activities including determination of potential risk areas and liabilities; application of such rules in practice, political climate and experience with respect to damage claims, etc., proposed or likely future legislation. Review organization chart indicating the persons in the Company responsible for permits, contracts with the environmental authorities, reports to the management, follow up of applicable legislation, etc.

Review policy memoranda, programs, procedures, training courses, emergency plans etc. relating to the environment.

Review any emissions into air or water; wastewater and other discharges; noise pollution; waste produced. Review discharge production, storage and related environmental risks.

Review any studies, analyses, examinations of discharges and emissions, whether produced internally or by external consultants; description of material problems or risks.

Review removal methods of waste; cleaning methods for discharges/emissions; state of compliance with law.

Review waste removal contracts and any agreements relating to environmental matters (pollution clean up, etc.)

Review history of any accidental discharges and the results and measures taken to clean up and prevent future occurrences.

P. PERMITS AND LICENSES

Review all environmental permits and licenses required for the Company's' activities including licenses with respect to manufacture, labeling and sale of products.

Review the history and current status of permits Company's compliance with and licenses.

Review procedure for transfer of licenses or permits when the business is sold - Assets vs. Stock.

Q. RELATIONS WITH AUTHORITIES

Description of Company's relationship with environmental authorities.

Description of obligations of Company to file reports or studies with authorities with copies of reports.

Description of any inquiries, inspections, examinations, investigations, etc., by environmental authorities and results; copies of documentation/correspondence; description of suspensions or withdrawals of any permits or licenses; significant correspondence for the last five years.

Description of any surrounding/adjacent conditions which could give rise to liability for the Company.

Description of insurance arrangements and environmental claims history.

Description of any injuries or illnesses of personnel, accidents, during the last five years, with effect upon environmental matters.

Description of any other relevant matters with respect to the environment.

R. REAL ESTATE AND EQUIPMENT

Review all real property owned by the Company (and appraisals, if available); nature of the title held, and any mortgages, liens or encumbrances on the property; title documents confirming ownership; report by person authorized to conduct title searches.

Review any property rented or leased by the Company; nature of leasehold interest; copy of the leases; description of significant or unusual clauses.

Check compliance with land use planning and zoning laws and any other laws affecting real estate.

Check limitation, if any on the Company's real estate or business as a result of historic preservation or similar laws or regulations.

Review any title insurance or title searches.

Review all renting/leasing agreements with respect to machinery, equipment and automobiles not owned by the Company.

Check for compliance of use of machinery and equipment with applicable laws and regulations, and in particular, safety and environmental regulations.

Review all documents evidencing liens and security interests granted on machinery and equipment.

Review the Company's depreciation policy.

Review a list of surplus or idle equipment. Summarize annual maintenance expenditures.

Determine if there are any related party transactions in connection with plant or facilities.

Review the ownership and use history of each parcel of real property and leased property used by the Company in the last ten years.

S. MISCELLANEOUS

Review all significant articles from financial or other publications including market research, consulting reports, industry newsletters and competitive analyses, concerning the Company or its competition.

Review all internal or external analysis/research regarding competitive products/technologies.

Review all customer and independent contractor complaints or demands received within the last twelve months with respect to the Company or the services thereof.

Review all complaints of residents and business establishments near any of the facilities involved in the business of the Company received within the last twelve months.

Review all complaints to the Company received within the last twelve months regarding any employee or agent associated with the Company.

Steps to Success

Carefully consider the decision to buy a business.

Educate yourself on the type of business you would like to buy.

Conduct research on businesses currently for sale.

Determine how much money you can afford to pay.

Contact and consult with your local advisor on initial goals and criteria.

Evaluate the businesses that are being offered for sale.

Confidentially tour the businesses you are interested in , noting provements or changes that you would like to make.

Evaluate the location and "feel" of the business.

Through your advisor, place a bid on the business or businesses in which you are interested.

Engage in negotiations with the seller

Once an agreement has been reached, your advisor will walk you through the details of finalizing a sale. Details include negotiations, new owner financing, complete documentation for the purchase and closing the purchase.

Do Your Due DILGENCE

Close the purchase.

Congratulations!

www.sunbeltasiagroup.com

[~G~]

I have noticed a lot of bars and guesthouses for sale, why.

They're just popular because they're out there. "I spend so much time in bars, I better own one and save the beer cost" is only half a joke. For those with no prior business experience they seem like easy money. Those with some experience will look a bit deeper.

Is there a living to be made out of such businesses, I dont live in a fantasy world and dont think that I will come to Thailand and make bucket loads of money.

If you do not intend to make lots of money, don't start. Work in OZ and come for long holidays. If you don't have strong enough motivation to make plenty of money don't open a business in Thailand. If you plan to run a business here on a "semi-retirement mode" or if you are looking to make "just a living", "just a bit to support myself" you are more likely to just lose than earn anything at all. Don't open a business as a hobby either.

For foreigners, business here is rough - apart from the difficulties that local business owners face, the government doesn't like you unless you're really big plus you have language and cultural gaps that don't really help. In order to make a living, in western standards, you will need 100% commitment, 1,000% motivation, and 10,000% persistance. And, of course, to be well-financed, to pay for mistakes during the time you learn.

I think along the lines of lifestyle and different cultures for the move, I can make more money by staying here in Oz but I am more interested in a change.

Sound excellent, but if you have saved enough, you might earn more from putting this money in a conservative investment portfolio rather than in a business here.

Edited November 17, 2006 by ~G~

[lannarebirth]

Steve

Many people do not do due diligence. Example: A guy walks into our office yesterday; he wants to buy 86% of a bar for 31.5 million Baht. Already has given 500,000 via bank wire and 500,000 more was given in cash that morning with no receipt.

Told him to run away from the deal. No matter how airtight the contract our lawyers would write. He would lose. I knew the history of the seller on a previous deal that a friend had us look at, AFTER He invested. This seller in the old case stated the shares were the management company of the bar. That another company owned the lease and assets. He had the shares but as the bar stopped using the assets and was a new lease, the company was worthless.

Told this guy that walked in, the only way, we would ever represent him was if the sale was an asset purchase and the company that he controlled would have the lease.

We gave him the due diligence sheet to give the sellers lawyer. He glanced at it and said we need to close on this. My risk is he won't sign the purchase agreement as the lease is in the seller’s wife's name. He knows we will never allow that!

This guy did not even have an offer to purchase. This guy is going to lose. I brought in other people to tell him the same, run away unless you can buy the assets, not the shares. Again he said the seller would not sell the assets, just the shares. His risk was not getting the bar he always wanted. I'm positive he has gone with another firm to represent him as he has not called back.

Another case this week. Person signs a contract as the buyer of the company. He is not even a director. Was going to invest 22 million in two plots of beach front land of 109 sq. wah. He has a contract but it’s worthless.

The Land has a servitude! Meaning that the land is practically worthless. Someone else has the right to be the "Landlord" for their lifetime and live there not the Seller or who the land is sold to. The contract even states there is SERVITUDE on this land!

The Seller in the contract is not even on the title deed. Someone else is even the seller.

The buyer is not the representative buyer as he stated. He’s not even on the company as the director.

One plot of 109 sq. wah is mention in the contract not the two he was buying

He was told the plot closest to the beach would be a garden. He buys the next two plots. Logic would state the "garden" plot would be the easiest to sell and why he was told this. No mention in the contract that the "garden" plot would always be a garden and nothing built to block his view. He hires a private detective. They offer to sell him the “garden” plot. Sends 12 different people in, they all were told the garden plot was for sale.

His boyfriend admits getting one million Baht to talk him into buying the two plots. The "buyer" then is so happy that his boyfriend is honest and so clever. Not a typo, “ happy” not angry.

He already gave 2.2 million Baht deposit before he hire us to do due diligence. He now is being told he will lose. We of course have something to say about that!

Another case:

We are hired to due diligence on wednesday. We are told to negotiate with the seller. The sellers name is no where to be on the title deed. Were told it’s a government error by the “seller”.

When we tell the buyer,

“I really want this house. Negotiate with her. For sure she is the owner."

"How do you know?" our lawyer asked.

" She told me!"

Seems like lots of Monopoly money floating around here. I could go on and on. Of course there are good deals, many. But the people that arrive throwing around monopoly money is mind-boggling.

www.sunbeltasiagroup.com

Sunbelt.

Thank you for these anecdotes you occasionally share. Not only are they great reminders of the pitfalls of not carrying out Due Diligence, they do wonders for my self esteem.

[migrant]

Sunbelt offers great advice! (please deposit beer vouchers at Golden Bar )

Really, I'm a CPA (Chartered Accountant to the other side of the pond) and work with many clients on buying businesses (here in California, not Thailand) but the rules are the same wherever you go.

Look for the proof of what you are being told through the due diligence. Too many buyers "talk" themselves into a business wanting to believe how good it is, when the signs are obvious.

[roadking95]

Firstly thankyou for the replys. I knew that it would not be easy to move to another country to purchase a business, therefore thats why I am posting on here and getting some great feedback. As with all things I am sure there are good and bad businesses, I definately would not walk into a business without getting the right legal or accounting advice. I cant believe some of the examples that the poster from Sunbelt Asia has given, I always work on the principle of buyer beware and try to do as much home work as possible. I am sure there must be some legitimate businesses for sale they cant all be bad deals or no one would buy anything.

G in relation to your post, I do want to make money out of a business dont get me wrong. But when I look at the small outlay there and the returns on that business, compared to the cost of a business here and what the returns are they are comparitive to a degree. It is something that I will look into and if the feasibility is not there then I will walk away, unlike some of the clients that were mentioned by the poster from Sunbelt Asia. I am in Pattaya again in Feb 07 and will have a look around at what is on offer, at the moment it seems that Thailand is not a good place to own a business, yet a lot of people are still doing so. I still have the option of Cambodia and also Vietnam which I will look into whilst I am there this time. Thanks for all your help and have a great weekend.

Steve

[Sunbelt Asia]

Firstly thankyou for the replys. I knew that it would not be easy to move to another country to purchase a business, therefore thats why I am posting on here and getting some great feedback. As with all things I am sure there are good and bad businesses, I definately would not walk into a business without getting the right legal or accounting advice. I cant believe some of the examples that the poster from Sunbelt Asia has given, I always work on the principle of buyer beware and try to do as much home work as possible. I am sure there must be some legitimate businesses for sale they cant all be bad deals or no one would buy anything.

G in relation to your post, I do want to make money out of a business dont get me wrong. But when I look at the small outlay there and the returns on that business, compared to the cost of a business here and what the returns are they are comparitive to a degree. It is something that I will look into and if the feasibility is not there then I will walk away, unlike some of the clients that were mentioned by the poster from Sunbelt Asia. I am in Pattaya again in Feb 07 and will have a look around at what is on offer, at the moment it seems that Thailand is not a good place to own a business, yet a lot of people are still doing so. I still have the option of Cambodia and also Vietnam which I will look into whilst I am there this time. Thanks for all your help and have a great weekend.

Steve

Steve

Every Country has pitfalls in some businesses. I have heard nightmare stories of Vietnam and Cambodia as well.

A General Mgr of a factory in Cambodia is investing millions US dollars and only was able to get a 7 year lease on the land. They are not that concerned when talking to them yesterday but I would be. They were more concerned with the infrastructure and low skills of the engineers.

Viet Nam seems to be a hot area now. In general, they speak better English than Thais and are very hardworking as well. The perception people get though they are fighting much more versus the sanuK you will find in Thailand. They are very aggressive trying to sell. The minute you won't buy, they leave you in mis sentence. These are just some of the comments from business people that have traded there. I will be there next week myself for the first time.

By the way in China, as property is owned by the government, the plant and equipment becomes theirs if they decide to terminate your lease.

As for Thailand, on a personal note, I'm involved with employing over 800 Thais with many businesses my wife and I owned. Other business people and I have found the business climate to be excellent. While others sadly have found it not be a good place to invest.

With Sunbelt Asia Acquisitions, we have been involved with well over thousand business transfers in Thailand in the past 5 years. It is very rare that a business transfer goes smooth, always a problem somewhere before the transfer. An old adage that a business transfer don't start till it has almost falls apart because of a problem. You want to have the "divorce: before the honeymoon." Not the other way around. This is why due diligence is important. If its too smooth, I guarantee something is wrong somewhere.

Do people find good business to acquire? Absolutely! In fact, over 80% are still in business, 5 years later. Just be sure to understand any business transfer or start up is not easy. It is work!

This is the same in the States, you'll find it the same as well in the Uk and Australia. I talk to other offices around the World and we all have in a given year... A good business but it had a greedy landlord who blew up the deal, sellers that back out, buyers who are frauds. Not every haystack has a diamond.

Another case this past week. An American comes into our office. He has a patent and had shipped over USD200,000 worth of equipment over to a friend so they could go into business. The friend backs out at the last minute and he then had a customs bill of over a million Baht. He then goes to a client that was buying his product in Thailand. He agrees to lend him the money and pay him a salary, give him an apartment to stay. All is well until last Friday he signs an agreement with him that he would pay back USD59,000 in 18 months. A clause however states that the loan can be advanced with a 30 day notice. Last Saturday, the next day, he was given a 30 day notice to pay the loan and the factory was padlocked. Did he have legal representation with the contract before signing? No. He was told it was a standard agreement and he signed. He can't file a criminal complaint as he was working without a work permit. The person who lent him the money, had promised him a wp many times and now is holding it over his head as he was not the employer, just the landlord and "bank" He does not have the $59K and does not have access to the $200K equipment as well.

The best advice I can give....get advice before you put down a non refundable deposit or sign an purchase agreement or go in business. The same advice as anywhere, get the advice before you do it! Then don't let your eyes gloss over. Listen. Expect problems before you sign the agreement as you can expect to have one or more issues.

www.sunbeltasiagroup.com

[smartecosse]

having read the above comments from sunbelt i can't belwive how <deleted> stupid some people are.

What i also don;t understand is how they made the money they have to lose in the 1st place. Are they that inept in their own country or only when they get here and something other than their "brain" is guiding them?

[simon43]

I think one other reason why so many 'farang' lose money in business deals in Thailand is simply because there seems to be an amazing number of greedy, unscrupulous Thais in this country!

To give you an example. We recently wanted to borrow some money, using a plot of land owned by my Thai wife as security. We hired a lawyer and the contract was drawn up and registered at the land office. Before signing this contract, my wife carefully checked all details. All was ok and she signed. Our lawyer then gave her 2 more 'copies' to sign. They looked for sure to be copies of the first document, so she signed. However, we later found out that these copies had subtle differences in their wording which could/would have meant that we lost ownership of the land after 1 month. Luckily we spotted this attempted fraud and were able (with crocodile smiles) to get it corrected.

The fact was that the money lender, our lawyer and the land office officiial were all working together on this scam!

That's why farang get caught out in Thailand. They are used to trusting lawyers in their own country, (especially if it's their own lawyer!) They also would find it inconceivable that a government official would work in tandem with their own lawyer to scam them.

I've learnt my lessons in Thailand. The only person I now trust is my wife, because she always puts any money earned into my bank account, not hers:) As for everyone else, whether they be hiso, loso, government or whatever, I trust them zero percent!

Simon

[samran]

I think one other reason why so many 'farang' lose money in business deals in Thailand is simply because there seems to be an amazing number of greedy, unscrupulous Thais in this country!

From what I read above, it is the greed or the niavety of the (usually) farang newbie into the country. The local simply sees them coming and takes advantage of it (not condoning it, but facts are facts). I mean, people come here, think the rules at home don't matter any more...everything is sabai sabai....and then they get taught an expensive lesson in business. You should always know your regulatory enviornment, under take due dillegence, and make sure your arse is covered.

I mean, 90% of the time, people who come here are going into something that they have no experience in. The farangs that I have seen who are truely successful here, are doing things that they knew how to do back home, or they are building on that expertise to create a unique product or service.

I've learnt my lessons in Thailand. The only person I now trust is my wife, because she always puts any money earned into my bank account, not hers:) As for everyone else, whether they be hiso, loso, government or whatever, I trust them zero percent!

Simon

And this is something that happens here with Thai's too. Half my family is Thai Chinese. And some of them are extremely successful. The only people they trust are the immediate family.

I've also got extended family here who I wouldn't trust as far as I can throw them.

The stories you read here, I grew up witnessing, seeing both Thai's and farang's trying it on with each other. As you say, hi so, lo so, government or otherwise. I used to be shocked by it...now I'm simply bemused.

[Sunbelt Asia]

I think one other reason why so many 'farang' lose money in business deals in Thailand is simply because there seems to be an amazing number of greedy, unscrupulous Thais in this country!

To give you an example. We recently wanted to borrow some money, using a plot of land owned by my Thai wife as security. We hired a lawyer and the contract was drawn up and registered at the land office. Before signing this contract, my wife carefully checked all details. All was ok and she signed. Our lawyer then gave her 2 more 'copies' to sign. They looked for sure to be copies of the first document, so she signed. However, we later found out that these copies had subtle differences in their wording which could/would have meant that we lost ownership of the land after 1 month. Luckily we spotted this attempted fraud and were able (with crocodile smiles) to get it corrected.

The fact was that the money lender, our lawyer and the land office officiial were all working together on this scam!

That's why farang get caught out in Thailand. They are used to trusting lawyers in their own country, (especially if it's their own lawyer!) They also would find it inconceivable that a government official would work in tandem with their own lawyer to scam them.

Well done Simon.

You are right about some lawyers.

Case 1

he wants to buy 86% of a bar for 31.5 million Baht. Already has given 500,000 via bank wire and 500,000 more was given in cash that morning with no receipt.

This lawyer that represented the past deal that scammed my friend. (Who is a big businessman and very sharp.) Still got taken by a fast move. How could this happen? The Landlord did not want to pay tax on income from rent. They then had to pay cash. The lease was then put in the wife name who then subleased it so the company then could get the expense write off. When the lease expired. She did not renew. As per the lawyer. they gave it to another management company.

This same lawyer screwed four people out of 100 million Baht in Hua Hin. Same BS that the company did not own the lease, just the management. I have been generic so far to protect identies but will say this lawyer is French.

Case 2

Person signs a contract as the buyer of the company. He is not even a director. Was going to invest 22 million in two plots of beach front land of 109 sq. wah. He has a contract but it’s worthless.

This lawyer is the brother-in-law of the developer! He was given instructions to make the buyer the director along with another friend. It was never done. The contract was reviewed by the brother in law of the developer. The contract is so bad and how the company is set up, you have to laugh

Case 4

An American comes into our office. He has a patent and had shipped over USD200,000 worth of equipment over to a friend so they could go into business.

The contract is written by the Lenders lawyer. He did not have his own lawyer. It is so one sided, that it would most likely get kicked out in court. The fact remains no work permit.

One other thing, the director of the company that signed it.( Lender) Did not put the company seal with his signature to make it binding or have it witness by two parties. Something else for folks to look at before entering into a contract.

The other is do not allow an advance acceleration clause like he had allowed. Another case this past week which we were able to keep out of a contract. The landlord had given a three year plus three year option. However with a 60 day notice, the contract could be cancelled. The 60 day clause is of course which was thrown out.

www.sunbeltasiagroup.com

[roadking95]

Thanks to everyone for their replys, I will be in Thailand for a month in Feb 07 and will certainly be having a look at some businesses with a very cautious mind. I will then spend 4 months there living in Pattaya to find if it is the type of place that I would like to be living and doing business.

All the best and thanks again.

Steve

[The Adjuster]

Steve,

If you want to be in Thailand it can be a fantastic place to do business both in terms of a challenging working environment and making money.....there is no reason why you cannot succeed here, just as well as anywhere else.

You have an awful lot to pick at in terms of advice and from my reading of your objectives you seem to have your feet on the ground which is vital............

Let me qualify what I am about to say...............I am 50 odd now (although I still think I'm 26) and have actually, I mean hands on, managed businesses in environments as diverse as, South America, former communist Eastern Europe, Arabia and others. Sometimes it was others money (and that is important) sometimes mine.....generally I made a pretty good fist of it.

Latterly I came to Thailand and now have a couple of companies ticking over quite nicely. Along the way I lost some brass (about US 65,000) due to taking things at face value and trusting a bit too much....the problems have generally been with other farangs as opposed to Thais......I am currently involved in some heavy litigation attempting to recover some of the money (something most people will tell you is impossible here) made possible because I am meticulous at maintaining paper trails....this is simple business practice not rocket science but it is amazing how many are poor at it that is why they fail (paperwork....first rule of business).

Early experiences taught me to be super vigilant with everything. Now if I am told it is raining, I check first before I believe…….no I don’t ask my lawyer (something they get pissed off about) to do it or my professional advisor and I don’t just look out of the window. No I get off my ass go outside and get wet…then I believe it is raining (second rule of business check everything……if you can…yourself………..professional negligence doesn’t exist here yet).

So why this preamble…well I fundamentally believe that those who are best able to advise on the sale and purchase of a commercial enterprise are those who have actually participated in such businesses and have not just learnt the theory……things are, and motivation is, different when your own money is at stake.

So, seek out some wise old sages actively running businesses (there are loads in Thailand) and just spend some time.

As usual the Sunbelt boys give fair and helpful advice although in the main but it is a very broad brush approach and I wonder how much of it, together with the examples come directly from the training manual?

The D/D document is a good aid to the memory but you will never get that level of detail here…..I tell my clients it is about levels of confidence, nothing is guaranteed and there is always risk…………………..coming from Europe is not recognized as a professional qualification !!

This month we have sold 4 beer bars……………only one did I think was value for money…….the purchasers were just too euphoric about what they were doing to be rational and I fully expect 3 to be back on the market quickly, not because they won’t earn…its just bloody hard work which eventually takes its toll and despite the rhetoric, they just didn’t have the balls.

There are many businesses here, not just bars and I would adjure you to take time and fully examine all that is available; make comparisons…. you never know what might fit your personal circumstances.

Thailand is expected to receive over 14m tourists next year and Pattaya will as ever be at the forefront of all this. The new airport, faster links with Bangkok will continue to make it the primary enterprise zone outside of Bangkok.

The property sector continues to boom despite set backs and there are persuasive arguments for sensible business acquisition.

When you come back to Pattaya/Thailand be in touch and I will spend some time with you if it will help.

James....

I think one other reason why so many 'farang' lose money in business deals in Thailand is simply because there seems to be an amazing number of greedy, unscrupulous Thais in this country!

To give you an example. We recently wanted to borrow some money, using a plot of land owned by my Thai wife as security. We hired a lawyer and the contract was drawn up and registered at the land office. Before signing this contract, my wife carefully checked all details. All was ok and she signed. Our lawyer then gave her 2 more 'copies' to sign. They looked for sure to be copies of the first document, so she signed. However, we later found out that these copies had subtle differences in their wording which could/would have meant that we lost ownership of the land after 1 month. Luckily we spotted this attempted fraud and were able (with crocodile smiles) to get it corrected.

The fact was that the money lender, our lawyer and the land office officiial were all working together on this scam!

That's why farang get caught out in Thailand. They are used to trusting lawyers in their own country, (especially if it's their own lawyer!) They also would find it inconceivable that a government official would work in tandem with their own lawyer to scam them.

Well done Simon.

You are right about some lawyers.

Case 1

he wants to buy 86% of a bar for 31.5 million Baht. Already has given 500,000 via bank wire and 500,000 more was given in cash that morning with no receipt.

This lawyer that represented the past deal that scammed my friend. (Who is a big businessman and very sharp.) Still got taken by a fast move. How could this happen? The Landlord did not want to pay tax on income from rent. They then had to pay cash. The lease was then put in the wife name who then subleased it so the company then could get the expense write off. When the lease expired. She did not renew. As per the lawyer. they gave it to another management company.

This same lawyer screwed four people out of 100 million Baht in Hua Hin. Same BS that the company did not own the lease, just the management. I have been generic so far to protect identies but will say this lawyer is French.

Case 2

Person signs a contract as the buyer of the company. He is not even a director. Was going to invest 22 million in two plots of beach front land of 109 sq. wah. He has a contract but it’s worthless.

This lawyer is the brother-in-law of the developer! He was given instructions to make the buyer the director along with another friend. It was never done. The contract was reviewed by the brother in law of the developer. The contract is so bad and how the company is set up, you have to laugh

Case 4

An American comes into our office. He has a patent and had shipped over USD200,000 worth of equipment over to a friend so they could go into business.

The contract is written by the Lenders lawyer. He did not have his own lawyer. It is so one sided, that it would most likely get kicked out in court. The fact remains no work permit.

One other thing, the director of the company that signed it.( Lender) Did not put the company seal with his signature to make it binding or have it witness by two parties. Something else for folks to look at before entering into a contract.

The other is do not allow an advance acceleration clause like he had allowed. Another case this past week which we were able to keep out of a contract. The landlord had given a three year plus three year option. However with a 60 day notice, the contract could be cancelled. The 60 day clause is of course which was thrown out.

www.sunbeltasiagroup.com

[The Adjuster]

I think one other reason why so many 'farang' lose money in business deals in Thailand is simply because there seems to be an amazing number of greedy, unscrupulous Thais in this country!

To give you an example. We recently wanted to borrow some money, using a plot of land owned by my Thai wife as security. We hired a lawyer and the contract was drawn up and registered at the land office. Before signing this contract, my wife carefully checked all details. All was ok and she signed. Our lawyer then gave her 2 more 'copies' to sign. They looked for sure to be copies of the first document, so she signed. However, we later found out that these copies had subtle differences in their wording which could/would have meant that we lost ownership of the land after 1 month. Luckily we spotted this attempted fraud and were able (with crocodile smiles) to get it corrected.

The fact was that the money lender, our lawyer and the land office officiial were all working together on this scam!

That's why farang get caught out in Thailand. They are used to trusting lawyers in their own country, (especially if it's their own lawyer!) They also would find it inconceivable that a government official would work in tandem with their own lawyer to scam them.

Well done Simon.

You are right about some lawyers.

Case 1

he wants to buy 86% of a bar for 31.5 million Baht. Already has given 500,000 via bank wire and 500,000 more was given in cash that morning with no receipt.

This lawyer that represented the past deal that scammed my friend. (Who is a big businessman and very sharp.) Still got taken by a fast move. How could this happen? The Landlord did not want to pay tax on income from rent. They then had to pay cash. The lease was then put in the wife name who then subleased it so the company then could get the expense write off. When the lease expired. She did not renew. As per the lawyer. they gave it to another management company.

This same lawyer screwed four people out of 100 million Baht in Hua Hin. Same BS that the company did not own the lease, just the management. I have been generic so far to protect identies but will say this lawyer is French.

Case 2

Person signs a contract as the buyer of the company. He is not even a director. Was going to invest 22 million in two plots of beach front land of 109 sq. wah. He has a contract but it’s worthless.

This lawyer is the brother-in-law of the developer! He was given instructions to make the buyer the director along with another friend. It was never done. The contract was reviewed by the brother in law of the developer. The contract is so bad and how the company is set up, you have to laugh

Case 4

An American comes into our office. He has a patent and had shipped over USD200,000 worth of equipment over to a friend so they could go into business.

The contract is written by the Lenders lawyer. He did not have his own lawyer. It is so one sided, that it would most likely get kicked out in court. The fact remains no work permit.

One other thing, the director of the company that signed it.( Lender) Did not put the company seal with his signature to make it binding or have it witness by two parties. Something else for folks to look at before entering into a contract.

The other is do not allow an advance acceleration clause like he had allowed. Another case this past week which we were able to keep out of a contract. The landlord had given a three year plus three year option. However with a 60 day notice, the contract could be cancelled. The 60 day clause is of course which was thrown out.

www.sunbeltasiagroup.com

[steveromagnino]

I think one other reason why so many 'farang' lose money in business deals in Thailand is simply because there seems to be an amazing number of greedy, unscrupulous Thais in this country!

I've learnt my lessons in Thailand. The only person I now trust is my wife, because she always puts any money earned into my bank account, not hers:) As for everyone else, whether they be hiso, loso, government or whatever, I trust them zero percent!

I suspect you have not worked in Korea. Or China. I would say that rather than the greedy Thais, there are a ridiculous number of greedy naive farang who don't do due diligence, thinking that their first world education is enough to make them smarter than the locals.

Caveat Emptor = let the buyer beware.

If someone is willing to pay 600b to travel 2km in a taxi, then there will be a horde of taxi drivers lining up to take their money (and there are). For every scam that people on this board complain about, there are a ton of willing participants. Sadly, this extends to buying businesses, real estate, choosing life partners and almost everything else. As for trust, in a company, systems are there to keep honest people honest - give people an inch and they will take a mile. The range of cliches just emphasizes the need to actually check things for yourself. Zero % trust until proven otherwise :-)

Perhaps the airport should have a sign 'engage brain' written in various languages. If the sunbelt stories (great stories BTW) help a few people to 'engage brain' then they have served their purpose.

Edited November 20, 2006 by steveromagnino

[Sunbelt Asia]

Many people do not do due diligence. Example: A guy walks into our office yesterday; he wants to buy 86% of a bar for 31.5 million Baht. Already has given 500,000 via bank wire and 500,000 more was given in cash that morning with no receipt.

Told him to run away from the deal. No matter how airtight the contract our lawyers would write. He would lose. I knew the history of the seller on a previous deal that a friend had us look at, AFTER He invested. This seller in the old case stated the shares were the management company of the bar. That another company owned the lease and assets. He had the shares but as the bar stopped using the assets and was a new lease, the company was worthless.

Told this guy that walked in, the only way, we would ever represent him was if the sale was an asset purchase and the company that he controlled would have the lease.

We gave him the due diligence sheet to give the sellers lawyer. He glanced at it and said "we need to close on this. My risk is the Seller won't sign the purchase agreement" "Why" we ask. He responds " As the lease is in the seller’s wife's name, you will never allow that and if you insist, the seller will not allow it!"

This guy did not even have an offer to purchase. This guy is going to lose. I brought in other people to tell him the same, run away unless you can buy the assets, not the shares. Again he said the seller would not sell the assets, just the shares. His risk was not getting the bar he always wanted. I'm positive he has gone with another firm to represent him as he has not called back.

Update on this...

The buyer came back today with the seller in our office. The seller has a share purchase agreement which of course was very one sided.

Looks like I blew the deal up to Kingdom Come.

First the seller states “if the buyer wants he can buy 100% of the shares instead of 86%”. Asked him he had their permission? He said "don’t need it! " Asked the seller if someone came next week and offered him more money, he would have the same response...” I don’t need his approval? “

He turned beet red on that.

Later we are talking about the lease in the wife name.

He says 'its two years left."

Asked him "why he never got a lease for 5 years? "

He said "I did but because of a dispute with the old shareholder, he tells everyone its 2 years but it’s in fact 3 years plus an option of 2 years."

Asked him “If the new buyer would be able to look forward to same type of story”

The buyer starts laughing as he sees I’ve caught the seller in a mouse trap. His wife comes running to his defense and states “It’s not a laughing matter” “No it’s not when your husband says one thing and tells his shareholders something else. Now you know why it has to be an asset sale “was my retort. They refuse and the seller starts screaming he needs the money. He has already spent it.

The buyer then says “ I no longer can trust you” The deal is off” They leave screaming at each other, At least he saved over 30 million Baht.

www.sunbeltasiagroup.com