Buying Existing Business

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Compared in an international perspective, Singapore is recognized as a global business hub and has been pulling individuals, investors, and companies in for several years now. Not only are multinational companies setting up shop in Singapore, but hundreds of thousands of local small and medium enterprises are joining in to enjoy the excellent infrastructure, the skilled workforce, and political stability.

But when entering a new market that you have little to no information about, you are sure to face some challenges. So instead of starting a new business, why not take advantage of the hundreds of local companies already incorporated?

In this article, we will be looking into the things you should take into consideration before buying an existing business and the process of purchasing it.

Things to Consider Before Buying an Existing Business

There are quite a few things that you should consider before buying a company in Singapore. Below are a few highlighted ones.

  • The existing risk: No business operates within a vacuum. By virtue of its location and economic environment, it is vulnerable to a certain extent of risk. You should investigate an organization in and out to identify all the possible losses in the acquisition.
  • The model: In Singapore, it is possible to choose different acquisition models. As a potential purchaser, you may wish to take over the entire company or only its assets. Each model comes with its own benefits and drawbacks.
  • Taxes: Depending on the business that you are considering, you may fall within the description of international goods and services under Section 21(3) of the GST Act to zero-rate your supplies (0% GST). You should understand the tax brackets the business falls under and check if they have been filed correctly and regularly in the past. You can also seek help from a reputed accountant or tax consultant to help you verify if everything is in place.
  • Licenses and approvals: When it comes to legal issues in any country, we recommend that you request the services of a lawyer. Their professional expertise may also prove crucial when creating the sales agreement.

Buying Process

In this section, we seek to outline the steps in the buying process:

Due Diligence

Due diligence is a critical step that cannot be circumvented. One needs to check and be sure that the business is actually offering the services or goods that it claims to do. What you discover from your due diligence will guide you on several features of the sale agreement, such as the asking price for the business, the payment plan, and other legal risks.

Part of the due diligence includes asking the seller the hard questions about the business, requesting legal documents, and physical verification of the company. As much as legal checks are important, it is crucial to give similar weightage to financial and operational aspects as well.

Below are some of the important questions to ask the seller. As the purchaser, you might have to perform your own independent research to be able to find verified information that would help you make an informed and conclusive decision.

  • Who is the (real) owner of the business? (This question applies if you are dealing with a broker)
  • What assets does the business own? ( In terms of real property, land, machinery, contracts, and intellectual property)
  • Compliance with the requirements of the law?
  • Is the business in any existing legal proceedings?


Once you are satisfied with all the answers you have received during the due diligence process, you are all set to start negotiating with the business owner. It is not only the asking price that is a negotiable item, but every item of the business is also negotiable.
You can start by offering your best price, which can either be in writing or verbal form. This offer is unbinding and usually changes during the course of the negotiation process. It’s not a straightforward process and can take a lot of time. Be prepared to go over and over again on the sale price and the terms to come to a consensus.

During this part of the process, we recommend that you prepare a letter of intent (LOI). This legal document’s purpose is to record every aspect of the agreement already discussed. It’s a non-binding document that helps in taking the buying process one step further. In most cases, the agreement also has a clause that ensures that both parties are no longer negotiating with other buyers or sellers for the said period.

Closing the sale

The findings of your due diligence, conversation with other key informants, and perusal of legal ownership documents will lead you to this final stage. That said, the concluding step involves inking down what has been agreed upon. This document should be in writing and must include all the terms explicitly. Some of the details in the agreement include the sale price, the new ownership of the different business assets, obligations of either party and the distribution of any closing costs.

While assessing the business, you may have found an issue or two, which could be legal or economic and may result in complications or losses in the future. Despite that, if you are still finalizing the deal, this is the time to ensure that the agreement contains clauses or riders that are in your favor and would help mitigate the risk.

The exchange of money or other forms of compensation and the signing of the agreement will close the deal.

Final step

After both the parties sign the agreement, a notification should be given to the Accounting and Corporate Regulatory Authority (ACRA) within 14 days. The notice should contain the change in ownership, registered office address, the appointment of new company officers, and changes in shareholding. Also, take note that you don’t need to pay any fees when notifying the regulatory authority.

Depending on the terms of the agreement, it will be prudent for you to send out a communication to all possible stakeholders.

These include employees, contractors, suppliers, shareholders, and customers. That will guarantee a smooth transition of ownership and business continuity.

Can Foreigners Buy a Business in Singapore?

The short answer to this question is yes.

A foreigner can buy a business and register it as a private limited company, limited liability partnership. Each form of ownership has its own unique features, advantages, and drawbacks. Take our advice, weigh all the pros and cons and register the business in a form that is most advantageous to you.

From the information above, you can appreciate the intricacies that come with the purchase of a business in Singapore. It is essential that you have localized information from an experienced and reputed service provider.

Get in touch with us today to have an informative and vital discussion with our expert team. There is no better company positioned in Singapore to help you navigate the murky waters than us.

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