Buying a company or business
Becoming an entrepreneur through acquisition
A change of ownership is one smart way of becoming an entrepreneur. A corporate acquisition will give you, for example, an existing customer base and cash flow.
An acquisition can be a more risk-free alternative to setting up a company, as after three years, up to 92% of the companies that changed owners will continue to operate. Growth in new markets can be done quickly through a takeover, and there is documented evidence of operations.
A company acquisition can be carried out as a business acquisition or as an acquisition of shares. The method of implementation, financial planning and evaluation must always be considered on a case-by-case basis.
Business acquisition
In a business acquisition, the buyer usually sets up a new company that acquires the other company's business or parts of it (machinery and equipment, premises, personnel, trade name, etc.). The financial and legal liabilities are not transferred to the new owner. Financing is sought for the buying company, and its collateral, such as business or real property mortgages, may be used as collateral for the financing. The buyer can also acquire a self-financing share using a personal Entrepreneur Loan.
In sole proprietors, general partnerships and limited partnerships, a business acquisition is the most common and usually the smoothest way of carrying out a company acquisition.
When acquiring limited liability companies, many buyers also want to purchase the business rather than the company's shares because it is easy and allows them to minimise any historical risks associated with the company. In such cases, the buyer is only responsible for the company's future and has only a limited risk. Moreover, the buyer can write off the goodwill of the acquired company over a period of ten years.
Acquisition of shares
In an acquisition of shares, the buyer purchases the shares or the majority of shares in a company. The acquired company will usually continue to operate under its old name and business identity code. The financial and legal liabilities of the acquired company will remain unchanged regardless of the change in ownership. The shares can be purchased by a natural person or using an auxiliary company.
The buyer may decide to finance the company acquisition by submitting an application for a personal loan to Finnvera. However, even in small companies, the share prices can be so high that financing the acquisition by means of a personal loan is not feasible or even possible.
