How to buy a business in Singapore

Step 1: decide what you want to buy

Buyers who know exactly what they want find good businesses faster and are taken more seriously by sellers. Settle these before you start looking:

• Sector. One you understand, or one where your existing business gives you an advantage.
• Size. Revenue, profit and number of staff you can manage and fund.
• Your role. Do you want to run it day to day, or own it with a manager in place? The first is buying a job and a return; the second is buying a return.
• Deal-breakers. For example franchises, heavy reliance on one customer, short leases or businesses that depend on the owner’s personal licence.

Step 2: line up your funding

Work out what you can pay before you meet sellers. Typical sources are:

• Your own cash, or money from investors or partners
• A bank acquisition loan, usually secured on the business, with you providing part of the price
• Vendor finance, where the seller lets you pay part of the price over time
• An earn-out, where part of the price depends on how the business performs after you buy it

Speak to your bank early, and ask whether any government-supported loan schemes apply to acquisitions. Be ready to show proof of funds: owners share detailed information only with buyers who can complete.

Step 3: find businesses for sale

Small businesses and shop takeovers are advertised on online marketplaces, classifieds and social media. Established, profitable businesses are usually sold through advisers who act for the owner and share full details only under NDA.

To see those, register your criteria with the advisers who act for sellers in your sectors, so you hear first when a business fits. Clearmere’s buyer register takes about four minutes. Some buyers also approach owners directly, which can work but takes time and tact.

Step 4: assess the business and what it is worth

You will usually receive an anonymised summary first, then sign an NDA to receive the information pack and meet the owner. As you assess it, ask:

• How much of the profit depends on the current owner, and will it survive their leaving?
• Are revenue and margins steady over three years, or flattered by one good year or government grants?
• Are the lease, licences and key contracts transferable, and for how long?
• How concentrated are the customers and suppliers?

Most owner-operated Singapore businesses sell for 2x to 5x normalised EBITDA, and smaller ones for about 1x to 3x owner’s earnings. Our valuation multiples and SDE vs EBITDA guide show how to check an asking price.

Step 5: make an offer and sign a letter of intent

Your first offer is usually an indicative one: a price or range, how you will pay it and the conditions. If the seller accepts in principle, the main terms go into a letter of intent, including a period of exclusivity during which the seller will not deal with other buyers.

Be specific about how much you pay at completion and how much later, what the price assumes about debt, cash and working capital, and what due diligence must confirm. See our guide to letters of intent.

Step 6: due diligence

Due diligence is where you check that the business is what you were told it is. Cover at least:

• Financial: the accounts, normalised earnings, cash flow, debt and working capital
• Tax: filings, GST and any open issues
• Legal: company records, contracts, disputes and intellectual property
• Licences and premises: which licences transfer, and the landlord’s position on the lease
• People: key staff, contracts, foreign worker quotas and whether the team will stay
• Commercial: customers, competitors and whether the plan you are paying for is realistic

Use your own accountant and lawyer. Our due diligence checklist lists the documents to ask for.

Step 7: structure and the sale agreement

You will either buy the shares in the company, taking it with its history, or buy the business and assets, choosing what you take. Each has different effects on liabilities, staff, licences and stamp duty. In a share purchase, the buyer normally pays stamp duty on the share transfer. See our guides to share sales and asset sales and tax and stamp duty.

The terms are then set out in the sale and purchase agreement, including the warranties the seller gives and what happens if they turn out to be wrong.

Step 8: completion and handover

On completion you pay the price due and take control. The weeks that follow decide whether the business keeps its value:

• Agree in writing how long the seller stays to introduce you to customers, suppliers and staff, and in what role.
• Speak to key staff early, and consider retention arrangements for the people the business depends on.
• Change bank mandates, licences and registrations promptly.
• Change as little as possible in the first few months, until you understand why things are done the way they are.

Buying a business as a foreigner

Foreigners can own 100% of a Singapore private company in most sectors. The company needs at least one director who is ordinarily resident in Singapore, some regulated sectors such as healthcare have rules on who can hold the licence, and if you plan to move here to run the business you would normally need a work pass such as an Employment Pass. A Singapore lawyer can confirm what applies to you.