Buy a ready-made company in Ukraine with assets

Buying an operating company with fully established operations is a great option if all the processes are properly implemented. Buying a company that has customers, contracts, established processes, and an established cash flow can be a good alternative to starting your own business from scratch. This is also true of acquiring other ready-made organizations, such as charitable foundations.

However, such a decision requires an in-depth analysis of the PROS and CONS, because the transaction amount will not be small and the risks are quite high.

In our article, we will tell you how to safely buy a ready-made company and successfully run it.

In general, the topic of buying a ready-made company and its sale is much more complicated than it may seem at first glance. So let’s elaborate on this issue in more detail.

What should be checked before buying a ready-made company?

Once you determine the niche and understand what the basic criteria should meet the potentially interesting to you company, you can start searching. It is always recommended to involve lawyers!

The decision to buy a company should be prudent, and the following number of details should be clarified and checked in detail:

  • The number of people that currently have legal title to the company;
  • Tangible assets that you will acquire;
  • Copies of all agreements and legal documents;
  • Whether the company has any litigation, whether there is any such risk in the future;
  • Whether the company has consistently fulfilled its tax obligations, whether there are any wage arrears, etc;
  • The financial statements for the past year;
  • Turnover, profits, expenses, and other important business performance features;
  • Whether the company has registered trademarks;
  • Advertising and marketing expenses – how the business attracts customers and what costs are involved;
  • Payroll costs;
  • The dynamics of the market, prospects for further growth, demand features;
  • The real reason for sales, the main motives of the owner.

In any case, you should get as much information as possible to help you weigh the pros and cons. Qualified professionals know where to find the necessary information and what to check. Sometimes the risks don’t seem obvious to the average person, but it is the lawyers who will point you to them and give you valuable advice.

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Foreign purchaser of a company in Ukraine

Successful entrepreneurs always involve qualified specialists in important processes, because they do not need underestimated risks or a long procedure. Another important aspect is the difference in the laws of different countries.

The business model that works in a certain state of the United States, can not be implemented in whole or in part in Ukraine or, for example, neighboring Hungary. Companies with foreign beneficiaries and investors use trusted law firms in Ukraine not only for registration procedures or buying a company, but also for accounting or legal services during all activities.

That’s what happened to our American client. He was faced with the need to expand its activities abroad, namely in Ukraine. Scope of activity for him has been precisely defined. It was also decided to buy a ready-made organization, namely a charitable foundation with assets, established activities, a certain reputation and recognition, as well as employees familiar with all aspects of work.

The client did not want to go through all the bureaucracy and invest a lot of time and money in the development of the charitable foundation, because the formula of work has already been designed and implemented. That is why he addressed our lawyers to support the purchase of the foundation.

Our specialist immediately informed the client about the risks and the need to analyze concluded contracts in detail and recalculate the funds. In the presence of certain violations, the charitable foundation may be deprived of the status of a non-profit organization, because the client can not carry out entrepreneurial activities only to meet its goals and achieve the objectives of activity.

Getting such a status again is not as easy as for the first time, and you have to wait a whole year, and to carry out activities without this status as a “charitable foundation” is almost meaningless: all the advantages and opportunities are lost, but the limitations remain.

As a result, it was decided to involve experts in conducting due diligence.

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How do we check and help you buy a company or non-profit organization?

After receiving the results of the audit, some of the risks envisaged by our lawyers were confirmed. There was a high risk of losing the non-profit status already at the first inspection by the tax authorities. After all, the founders of the charitable foundation were registered as individual entrepreneurs – there was some movement of funds between them and the CF. Of course, some of them could be confirmed and explained, but we were not sure about all the transactions between the accounts.

It should be noted that there were no judicial disputes, the activity was legitimate. Although any business is associated with a lot of risks and the need to constantly solve some issues. We are working to minimize them, find and implement solutions, and can guarantee the client the safety of the transaction.

Our lawyers have developed a clear plan of action with minimal risks and the so-called safety cushion.

Since the client was ready to start active operations “tomorrow”, we continued to support the re-registration of the CF to him and at the same time registered a new “clean” charitable foundation with a correctly stipulated sources of formation of the foundation’s assets, the procedure of acceptance of charitable assistance, which minimizes the problems with the tax authorities in the future.

We met all the needs at once. The client started running the foundation within the shortest possible time, with all the necessary agreements re-concluded, the integration was gradually attracted with the new charitable foundation. In a year all activities should be transferred to it. Thus, the risks are minimized, the client is 100% confident in the future and the successful continuation of activities.

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What documents must be prepared to re-register and register the business?

The documents and the procedure will depend on the type of organization you are buying. For example, to re-register a ready-made charitable foundation, our lawyers have prepared the following documents:

  • an application for amendments;
  • minutes of the general members meeting of the foundation;
  • new edition of the Charter.

Please note! In addition, the leaving members of the foundation shall provide their application certified by a notary. Our lawyers provide a template.

The change of members and the head of the foundation may be registered within a day from the moment of signing the documents. As for changing the name or address of the foundation, it can be done without any negative consequences in the same terms, but after that you will have to wait another 1-2 weeks for a new decision on inclusion in the register of non-profit organizations. If you have a strict time limit, then keep in mind that you will not be able to open a bank account during this period.

The client appreciated our approach to the provision of legal services, noting that he was comfortable in the legal process, it was clear, and the final objectives were successfully achieved within the stipulated period.

If before buying a company you want to understand exactly whether this is the best option to achieve your goals - we will answer your questions. In particular, a lawyer will:

  • analyze your situation and your main goal, as well as the legal possibilities of achieving it;
  • estimate the risks;
  • explain the options available to you to achieve your goal and help you decide on the best one.

Please click here to see available ready-made companies.

We will not only select a company to your needs and requirements, but also help you with its safe re-registration to the new owner. If necessary, we will provide legal advice on further operations.

Publication date: 11/08/2022

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