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Buying a Small Business Overseas – 5 Tips for a Smooth Transaction

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Buying a Small Business Overseas – 5 Tips for a Smooth Transaction

By Caron_Beesley, Contributor
Published: March 4, 2013

Interested in buying a business overseas? Whether you’re looking to expand into new markets or are just planning on funding your retirement plans outside the U.S., there are a number of steps you should take to ensure your new venture goes smoothly. Everything from business practices; legal and regulatory requirements; navigating an international sale deal; and language and cultural differences will come into play.  

Here are some considerations and issues to bear in mind as you go about buying a business in a foreign country.

Language

If English isn’t the first language in the country where you intend to buy a business, then learning the local language should be your first priority. If you can’t do this, then you will need to think long and hard about your motivation and determination for going the distance in this new territory.

Measure the Risks to Your Capital Investment

No matter how much capital you have, to lessen the risk, be sure to factor in the many variables that come from buying and running a business. Factor in cost overruns, delays getting started and unforeseen expenses. For example, don’t always assume that cheap labor is always going to be quality labor—you get what you pay for. You’ll also incur many of the employment expenses you incur in the U.S. such as benefits, taxes, sick leave, and social security.

Work with an Expert

As with any overseas venture, one of the most important things you can do when buying a business abroad is to consult an expert. Accountants, lawyers, tax attorneys, and real estate brokers, can all help you succeed with your cross-border purchase. To ensure the best representation, work with experts who have experience in the location and industry in which you are buying a business. But you’ll also need to find in-country experts who are familiar with business and regulatory matters in the country you intend to buy a business.

Do Your Research About Cross-Border Deals

It goes without saying that any business venture requires research, so here are some issues you should bear in mind:

  • Laws and Regulations – Legal and tax regulations overseas can be even more complicated than in the U.S. for business owners. Licenses and permits, for example, can take several months if not years to be granted. You’ll also need to understand how the country handles expatriation of taxes on profits on foreign business owners. Much of this information can be found online, but for more information, reach out to local in-country small business organizations, business leaders and chambers of commerce.
  • Understand the Buying Process – As you seek advice, be sure to ask about the negotiation and valuation process involved in buying a business. What’s included in the sale? You don’t want to be left with a hollow shell of a business when you thought you were getting furniture and fixtures too.
  • Pay Heed to the Competition – As an outsider, it can take a tough skin to make a success of a small business in a foreign location. Be ready for that—look for ways to test the waters of the community before you take the plunge. Also look to the competition to understand your market potential—is there a gap or untapped need that you think your business can serve?
  • Determine How You Intend to Manage Your Business – Will you re-locate yourself (that brings with it a raft of immigration factors), or will you manage it from the U.S. with on-site staff? Could you keep the current owner and hire him or her as an employee? Know your options before you hit the negotiation stage, and weigh the benefits of each.

Be Prepared to Connect and be Agile

Last but not least, buying and running a business—let alone an overseas business—requires tenacity, agility, and deep personal connections. So do your research, weigh the pros and cons, have a plan and heed laws and regulations. But above all, be true to your ambition and drive. Some of the best small business owners succeed not because they stick to the rulebook, but because they look for ways to take the initiative and forge a path for themselves.

 

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

Starting an oversea business is very complex. Have the contacts in Chile and Colombia to start or create alliances. This post was edited to remove a link. Please review our Community Best Practices (http://www.sba.gov/community) for more information about how best to participate in our online discussions. Thank you.
I have my reservations about expanding overseas as a small business owner if you have never run a business of your own successfully in the US. Language barriers and cultural differences could completely ruin your project if you are not up for it. I would rather team up with a trusted local or someone who understands the new area before going into that territory. Great article! Thanks.
A successful start of business and expansion is depending on a deep research. If someone is planning business expansion overseas then he should take information from authentic sources like Caron describe above and should involve any reliable local person who can help and give information related to matter.
Expanding business overseas? Phewwww... Its all about research, patience and legal acquaintance. If you are really looking to expand your business in overseas then the first thing you need to build a brand in home country. This will be the basis of customer orientation overseas. Also you need to hire a legal professional to guide you to well in establishing a business. Also you need to understand the legal stuff. Many online issue will also be there. The website content and online survey about the people who uses internet. There may be chances that people want the same thing in a different way.
Really good post! Thank you! This post was edited to remove a link. Please review our Community Best Practices (http://www.sba.gov/community) for more information about how best to participate in our online discussions. Thank you.

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