Singapore is one of the best places in the Asian countries to start a business and one may consider the idea of buying an existing business with already existing reputation and clients.
There are many types of business available in Singapore that is ready to be sold. However, there are few things to consider before buying an existing business.
Many potential business holder things that they can buy a business from a seller without using any service from the third party; just like buying a product with a normal transaction.
Unfortunately, this is not the case for buying a business for sale in Singapore. Potential buyer and seller of a business should get help from professional assistance and it is the responsibility of professional services to make sure that confidentiality is intact.
Otherwise, if confidentiality is lost then the sale may get out, there are certain risks of losing a client, the problem in employees and a change in credit terms.
A potential buyer may look for the sales or revenue of the company and for also he has to do a valuation for the company. Sometimes this is done by the seller, but a valuation from the third-party organization should be more acceptable.
Because, any outside valuation should provide a complete analysis of the business, the market it is operating and the future growth potential of the company in Singapore.
Additionally, he has to consider other factors such as the consolidation process of the industry, regular interest rates, unemployment rate, and other financial measures.
A buyer must learn to merge his personal goal with the market conditions. After the business gets sold, it is better for the new owner to keep the previous owner for few months or even for another year to achieve a smooth transition and it is also better for the new owner having success.
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One of the major issues in business for sale in Singapore is the valuation process and many time sellers consider their business with unrealistic value that is unachievable.
In real the value of a company is set by the sale and earning of the company, performance, market condition, status of the workforce, cumulative book value and the operating asset that may replace with equivalent fair market value.
Business for sale in Singapore must go through a valuation process and this includes adjusting book value, liquidation value. The value of adjusting book is determined by the potential cost that may require replacing the existing asset.
This process also requires offsetting the complete value against the total liabilities. On another hand the liquidation value is determined by the complete selling value of all equipment, inventory, furniture etc are sold separately. This value does not contain a company’s intrinsic value thus does not go far.
There are many income methods to determine the income approach and all the methods require knowing the level of earnings and a value that requires converting the earnings into the company’s value.
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The other factors to consider before buying a business to consider are the availability of required types of business if the buyer requires any special licensing, qualifications or credentials etc.
There are many types of business for sale in Singapore and potential buyer needs to choose that best suits the need: