Buy a Business Abroad

Summary: An increasing number of younger people and families dream of starting a new life overseas and the only thing holding these people back is the thought of earning enough of an income to survive abroad. One solution available is to buy a business abroad.

An increasing number of younger people and families dream of starting a new life overseas and the only thing holding these people back is the thought of earning enough of an income to survive abroad.  One solution available is to buy a business abroad.

This solution is not a cheap option nor is it necessarily an easy option, but for those who formulate a good business plan and do their due diligence and market research, the option of buying a business abroad could be the best solution to getting their new life in the sun.  This article covers the main considerations for all those contemplating buying an overseas business.

1) In terms of buying a business, one can either consider buying a going concern – i.e., an already established company, or buying a franchise opportunity that has yet to be established in the location in which the individual would like to live.  There are pros and cons of each of course. 

2) Buying a successfully established business is never going to be cheap and while it is possible to obtain loans to buy businesses that have annual records of turnover and solid predicted income and even growth patterns, it can be difficult to obtain finance when the business for sale is located overseas. 

3) Currency fluctuations can make it dangerous when raising a loan in one currency to purchase a business in another currency.  An alternative is to raise finance locally in the new country and if interest rates are favourable this can be a good option.

4) One has to ask oneself why a successful business will ever be offered for sale, usually the types of businesses people buy in typical holiday locations in which they would like to live are struggling bar and restaurant businesses!  It is imperative to ensure that a business being considered has got legs to run and can realistically generate the annual income the buyer needs to earn to live.

5) Due diligence should be undertaken relating to the amount of demand that exists for the product or service being offered by the business.  Some ideas that work well in one country will not work in a given location overseas and a business purchaser should retain an open mind whilst conducting due diligence so that no potential obstacles that will restrict productivity, growth and demand are overlooked.

6) Those who dream of going overseas to live often dream of a new life that is more relaxed and where they have more time to spend doing the things they love.  Realistically speaking the first two years of any new business require the business owner to commit massive amounts of time, effort, energy and resources to the company to ensure its success – therefore the realities of running ones own business should never be forgotten!

7) As a foreigner going to live in a given country are there any restrictions on outright ownership of a company.  In many emerging markets foreigners are only allowed to own a certain percentage of a company with the majority share having to belong to a local citizen.  Are there ways around this situation if it arises?

8) Will a language barrier restrict the business’s potential; will it create issues for the owner when it comes to dealing with suppliers, accountants, bank managers and authorities?  If so it is going to be imperative that the business owner gets to grips with the language as soon as possible – preferably before committing to buy a business abroad.

To buy a business abroad is to potentially sack the boss and quit the rat race for a better life in the sun…but such an undertaking should not be entered into lightly if it is to be successful!  Good luck.

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