Estimate time to read: 7 min
May 19, 2021
How to sell your business in Hong-Kong
Looking to sell off your business in Hong Kong? Hong Kong, which is one of the most developed country in the world, is situated in Southern China. Its economy has developed at a very rapid pace, and it has now become a crucial financial hub of the world. The primary driving force of its economy is the service sector.
In recent years, the infrastructure in Hong Kong has improved a lot. Here, tourism is a major business, since the state is one of the best locations for tourists from across the globe. Transportation systems are very well designed, such as the railways and airways. Literacy rates in Hong Kong have been growing steadily.
There are several perks of doing business in Hong Kong, one of which is peace in its political scenario. For those involved in starting up a company here, tax schemes are positive. Even, the justice framework is ideal. The structure here provides for up to 100% control of international investors’ enterprises. Starting and setting up a company here is very cheap as well. In comparison, Hong Kong’s corruption rate is one of the world’s lowest.
The shortage of freshwater capital is among the problems in Hong Kong. The inequality in revenue sharing is another negative consideration, and this might make you think twice about investing in HK. Living here is still very unaffordable, and the cost of living is also high.
Table of contents
Selling Your Business in Hong Kong – All you need to know!
The sale of the company is an invitation to potential investors/buyers for action. To get things rolling, though, the seller must be sensitive, impartial, and competent. While attracting the right buyer and possible future investor, you will have to continue managing the company. Here are a few steps you can use to easily and seamlessly start the process of selling your business.
Be ready with your Business outline/summary
For potential buyers, ninety percent of the time, a company summary makes it that much simpler. This important report is a 10- to 20-page summary of the company that can address the crucial questions of most buyers. A seamless and competent sales process may be given by a market overview. It adds value to the business and can decrease litigation after-sale. Yet, the trap is there. It should be prepared by a registered business broker. They are more advanced at anticipating what buyers want. As a company owner, when a pro does the job for you, you relax a bit. Ideally, you want to start on the right track for this. The company overview is also essential to an overall plan for a business sale.
Effective and Strong Business Marketing
You will identify the ideal buyer during the planning of the Company Overview. Will the ideal bidder need expertise in the sector in the discussion? If yes, advertise in trade magazines, trade groups, or other newspapers that your industry’s investors read. Relevant fields such as legal, medical, engineering, and other technical services are typically protected by this. Otherwise, to draw buyers whom you can advertise outside of the industry, you have a broader variety of media platforms. For more information, this strategy commands greater chances of buyers considering you. But, if the company is worth more than a million dollars, you can have a list of the prospective buyers’ names and contact addresses. All in all, make a third party do it for you while promoting the brand, including answering questions, so you can keep it private.
Inspecting buyers & Decision on Non-disclosure
You are sure as excited to hear that you have people inquiring about your advertising. Bear in mind that not everyone is a committed buyer. You must then properly screen the questions. Designing a sample email reply is one way to do it. If you get an additional comment, then you might have real buyers. Otherwise, signing the non-disclosure agreement (NDA) could take the queries to the next step. Do include a copy of your ad in your response. For buyers who sign an NDA, note in the reply that you have a proper market description. The email reply should exclude non-serious purchasers from this stage onwards. When you get good reviews, return to the attached NDA. The following questions should contain your NDA:
- What’s the net worth yours?
- How much capital do you have at the moment?
- Are you well experienced? (If you just need special expertise for your business)
Don’t ever walk around the rim and explicitly state your aim. It saves both the time and the time of the buyer.
Meeting them personally
Email them the jewel paper after you have decided which of the questions qualifies for your Company Overview. Tell them that you are open to touch and inquiries every time, that you can call polite and courteous. Next’s the game of waiting. Buyers need time to read the overview of your business. Feedback from buyers can be found below.
- If the buyer requests that more documents be provided without a meeting, you can also request details such as a profile, credit report, or income statements from them.
- If they give you some follow-up questions by email, answer them.
- Ignore them if they fail to see you after seeing the Company Summary.
- If they like your business, they will call you up again.
- Set up a meeting if they submit a long list of questions via email.
As you go along, continue scanning buyers, offering more details. After some more talks, most buyers will make an offer. When you see them in person, your instincts will tell you whether any of these buyers are real.
Accepting the Offer
To be part of a bidding agreement, get a competent negotiator before you consider an offer. At this point, draught an offer only after the main terms have been accepted by all parties. If the seller makes a bid, seek proof of funds from them. Before you bargain, you just want to make confident if they are financially eligible. Make sure that due diligence is reciprocal when you consider an offer. You are entitled to check the financial situation, history, and several other elements of the buyer. It will allow you to withdraw from the bid if you see that there are potential concerns with the customer. You may also request the preferences of the buyer of the due diligence business. If a particular checklist is available, use it to prepare the appropriate documentation.
Process of Due Diligence
If you recruit a knowledgeable broker, they will evaluate the organization and help find dealbreakers. Many brokers will also develop a personalized checklist for due diligence. During bid talks, you can use it to train the business for due diligence. During this point, buyers typically have more control. Also, they will comb over financial documents to ensure that they buy a decent deal. If you would try to fund half of the deal, you might have some leverage. It also reveals that you’re clear.
At last, Closing the Deal!
You’ve been dreaming of this result for days and weeks. It’s going to be a reality if you plan for its weeks ahead of time. Keep all participants coordinated with checklists and schedules. You and the buyer should meet for the closing deal. Or both parties sign the papers when they become available and forward them to the broker. Once the broker has it all, the broker will release the fund to the seller and the trade will be closed.
As you have seen in the article selling a business in Hong Kong is an easy process. So, if you want to sell your business you have to follow some protocols and also you have to be aware of some factors which are important in terms of making a deal.