Singapore Expats

My friend offered me to take over his cafe for a token takeover fee.

Is it difficult to takeover business in Singapore?
I have no prior business - but I find it interesting and challenging.
What are the pitfalls ?

Are you a Singapore citizen or PR? If not, what is your legal status?

Makes all the difference for your options.

sgpeter wrote:My friend offered me to take over his cafe for a token takeover fee.

Is it difficult to takeover business in Singapore?
I have no prior business - but I find it interesting and challenging.
What are the pitfalls ?

One pitfall will be debt - make sure you're not taking over something that has a lot of debt run up - you wouldn't be the first to be suckered into that.

PNGMK wrote: One pitfall will be debt - make sure you're not taking over something that has a lot of debt run up - you wouldn't be the first to be suckered into that.

I did take up a business, sometime ago .. running very fine ..

The guy who was gracious enough to let me take over forgot to tell me that he owed Asia Pacific Breweries a lot of money, and he carefully hid it as he had been making payment by another company of his ..

Chalked it up to another lesson in life

ecureilx wrote:

PNGMK wrote: One pitfall will be debt - make sure you're not taking over something that has a lot of debt run up - you wouldn't be the first to be suckered into that.

I did take up a business, sometime ago .. running very fine ..

The guy who was gracious enough to let me take over forgot to tell me that he owed Asia Pacific Breweries a lot of money, and he carefully hid it as he had been making payment by another company of his ..

Chalked it up to another lesson in life

My point exactly.

It isn't exactly difficult taking over a business from the existing owner, including the premises and inventories. What is difficult is the due diligence process and market study prior to takeover.

Amongst the most obvious matters of historical revenue numbers, location, resident population in within the neighbourhood and current traffic, you need to consider off-balance sheet liabilities and debts that arose due to events prior to the takeover that the previous owners must stand to indemnify you, the condition of the equipments and machineries bought over (still useable condition), the inventories you are buying over (close to expiry and how long will the supplies last before the next order), the profile of suppliers and terms and relationships with these suppliers (did the previous owner piss key suppliers by stretching out payments due or non-compliance of the supply agreements), the general word-of-mouth and talks of the current cafe by residents, interior decor you are taking over (cheaper to takeover or to reconstruct from scratch?), the Income Tax Returns and cash register records of the previous owner (which tells you the revenue and expenses of the Company), study of the purchasing process and monthly budgeting for orders placement (when, how many, how much), and distribution agreements that provides the cafe with stable revenues.

In a takeover of business, instead of buying over the Company (which in most cases you do not have to since rarely if ever the Brand Name is also the Company name), you can buy over the business itself, under your own newly incorporated Company. Landlords of the premises are more than willing to do a transfer of the lease to your Company, provided they are not required to incur additional agency or stamp duties fees. In this instance of buying over the business, you can avoid buying over liabilities attached to the Company of the previous owner.

if you need an EP, or possibly an entrepass, they might not give it to you if its a straight handover. You could protect yourself from a sudden discovery of debt, as well as increase your chances of a pass by investing into the business in a series of investments.

However, if the business was doing really well, why would he want to sell?