How to buy a company, project or activity in Egypt?

What is the chosen field or industry?

There are a number of ways to own businesses in Egypt and any other country, each with strengths and weaknesses. We can offer important tips on why buying an existing company is the best option. From the option of starting an institution from the ground up!

What are the advantages of buying an existing company! An important advantage is that the activity, enterprise, business or company will have a firm foundation, a loyal customer base, marketing strategies, sales and cash flows that can be improved or developed, and it may also be easier to get financing to buy the company?

However, there will be defects you need to avoid. For example, you will still need capital to support cash flows and you will need to understand the current owner's reasons for selling the company. The reason may be retirement but it may also be financial, operational or court disputes.

This is the importance of conducting extensive research before buying an activity, business, enterprise or company and taking it seriously to ensure a practical and viable decision is made.

What area do you have to buy a company, project or business in?

In order to ensure the success of your investment step, you need to buy in an industry that suits your abilities, strengths, and financial ability and profit expectations.

You must be confident in the decision you make.

Here are three factors you should understand when deciding which industry to buy a company in:

What is your experience in this field or industry?

Experience

The starting point to consider is your career so far. What industries and businesses have you worked in before?

You do not necessarily need to buy a company in the same sector but it is helpful if there are scalable skills to exploit to your next field.

There are some skills that will apply to any business you run. If you are a lawyer for example, these legal skills apply to most sectors.

Ask yourself a question:

In which sectors have you performed well and why?

What business and industries do I have experience in?

What skills and experiences do I have and can I apply in other fields?

Which of these skills can I apply to business in general?

- Money and Risks

Some sectors are more lucrative and also more dangerous than others.

For example, opening a restaurant is a project that requires intense passion and hard work but returns can be enticing.

Do you want to be rich or enjoy the current job? Do you have an appetite for risk or do you want the days to pass peacefully and safely?

Understanding current market trade trends can help you identify the most sought-after and stable sectors.

- Feelings and Interests

While industry and your investment capabilities are important, buying a company requires much more.

Passion for what you do will give you job satisfaction, motivate your employees and help you retain customers. This passion will also help you get through difficult times that may arise from time to time.

At RE/MAX ALMOHAGER REAL ESTATE, we recommend that you make a list of your business preferences and what you find to be inappropriate for you. For example, you may enjoy working directly with customers or working in the open atmosphere. You may find management tasks boring or you may find numbers and equations burdensome.

Modern analytics can show you prosperous industries but cannot show you or ensure whether you are successful in this industry.

Once you decide on a sector you will need to shortlist the steps you will take and here are some important tips:

Find the right work to buy

When you buy an existing company you will have to choose a job suitable for you carefully. This will be your decision but here are some factors we recommend to analyze:

- Price

Analysis of sales income or cash flow

- Status of work

Audit of Business Financial Situation

- Location

Find out if the property is rented or freely owned

- Financial situation of the building

If the property is subject to a mortgage contract

- After finding the right work

Once you find the right work you can start making inquiries about the work you should ask the seller detailed questions to understand more about the work. Some questions can be linked to:

- Working Date

- Customer Base

- Why the owner sells

- Business Model

- Total annual income or net profit for the past three years

- How the work was evaluated

- Assets and liabilities to be included in the asking price

Sales Structure

So far your shortlist may be one or two ideal companies. Before you make an offer you will need to complete further steps. Such as evaluating the business and raising funding to buy it.

Find out more: Want to know more about M&A purchasing methods? Understanding the buyer's view of mergers and acquisitions.

Evaluate the work you want to buy

Valuing business as a buyer and seller is crucial. There are many ways to understand the value of the work and you may want to hire an evaluator to support you.

In this article we will briefly review some evaluation techniques that you can use to understand the value of the work you want to buy.
We have created a useful and reliable guide on how to evaluate a business that is worth reading if you want to understand more accurately what is required for evaluation and why it is necessary for any business transaction.

Some of the evaluation techniques you will use to evaluate the work you want to buy include:

Asset approach

Seller's estimated profits (SDE)

Price-to-profit ratio (P/E)

EBIDTA reduced cash flow

Comparable analysis

A combination of valuation techniques can be used to understand more about the company's value.
If you are considering evaluating a business on your own, you can use RE/MAX ALMOHAGER Rapid Assessment Tool for real estate marketing. However, we recommend using a business selling agent or broker with experience in valuing the business.

Increased funding for business purchases

When you enquire about a sale company, the seller will want proof of a realistic financing plan from the buyer. We have a dedicated guide for loans to buy an existing company that analyses the pros and cons of financing and explores a range of different options you can consider when collecting finance to buy a company.

Your personal circumstances and the nature of the work on sale will affect the availability and suitability of your options.

If you want to understand the options available, here's a list of several types of financing options:

Loans

Debt financing

Equity Financing

Investors

Friends and Families

Once you find work that fits your goals and secure financing for purchase it will be time to make an offer.

Presentation and negotiation process

This is the point at which your business purchase journey will begin and you will need a lawyer to support the following steps: When making an offer to the seller you can start with the lowest offer for you. You must be prepared to justify why you made this offer.

The negotiation phase exists because buyers and sellers will constantly negotiate a price that works for them. Usually there is the highest offer and the lowest offer and negotiations will allow a perfect price to be reached.

Negotiations are not a game in which the winner takes everything. It is about compromise, mutual trust, skill and patience.

Negotiation

Some useful negotiating advice:

Take a moment and put yourself in the seller's place and think about the perfect result. The seller may be explicit about what it authorizes or will keep its papers hidden.

Knowing what the seller wants from the negotiations will help you meet him halfway and think about several ways to structure a deal that satisfies both parties.

Above all, the seller wants to be able to trust you, so show the seller that you are trustworthy and serious about your attention.

- Be willing to make some concessions but also be ready to stand firm if the seller wants to cross certain limits. For example, it may be decided that the business depends heavily on the owner (seller) and insists that he continue to work in the company for a limited transition period after the sale.

- Achieving the right balance is difficult. You don't want to back down easily but you shouldn't look stubbornly resistant to compromise.

- If you would like a detailed analysis of how to prepare and what to expect during the negotiations please feel free to read our bargaining business manual.

Prepare for due diligence

This is the stage of agreement with the seller on the price and the sale contract will be signed - now is the time for the buyer to start due diligence.

Due diligence is your chance to check and preview work closely against seller orders. If you detect problems not previously disclosed by the seller you may wish to renegotiate the terms or move away from the transaction.

It is a major task and must not start without the help of an accountant, lawyer or business broker.

There are three main areas to focus on when performing due diligence: commercial, financial and legal. We'll get it briefly.

Due diligence for commercial purposes

This is your chance to learn about the market you enter, business operations, employee and customer perspectives and suppliers. The following elements should be analyzed:

- Market size, growth and related trends

- Inventory

- Customer perceptions, suppliers and employees

- Systems and Operation

- Products & Services

- Financial Examination

The most important financial consideration is to find a clear history and paper path. If there are unsubstantiated transactions or financial transactions, there may be problems in the future.

- Check the following financial details:

- Past, current and projected financial performance

- Maintenance Business Profits (BME)

- Debtors

- Creditors

- Salaries and wages

- Insurance

- Bonds and guarantees

- Due diligence

The legal aspect of due diligence is the hardest to understand with complex terms and vague techniques you may not be familiar with.

Business legal proceedings are not necessarily a red flag if the company has some legal problems in its past. You should pay careful attention if the seller fails to detect these problems.

The elements that your legal team must investigate include:

- Trademarks and business names

- Claims and legal risks

- Prior, current or potential liabilities

- Contract Terms

- Patents

- Claims and guarantees

- Staff entitlements

The current owner expects you to conduct the due audit and you should be prepared to speak to customers, employees and suppliers as well as investigate the company's history and financial statements.

Don't back down ask all the questions you need and get everything written so you can understand exactly what you're in. If you are satisfied with your findings, it is time to complete the transaction.

Completing the transaction

Making the deal is the last and most important step. Now you're too close to becoming a company owner.

To ensure smooth procurement you must do the following things:

Specify a fixed period of time

There is nothing more frustrating than a deal that lasts for months on end.

Make it clear to the seller that you wish to finish everything by a certain date. This reduces the risk of the process being interrupted unless there is a reasonable explanation for any delay to ensure that the process proceeds as smoothly as possible.

Continue to build trust

Do not do anything to damage the trust you have built throughout the process. Until the final contract is signed, the seller can still retreat.

Think before you talk

At this point you are well aware of the seller but keep things professional and follow best practices under the instructions of specialists you have hired.

Don't be afraid to ask questions

Now you might feel like you've asked so many questions that there can be nothing left to ask. But if you have any doubts, don't be afraid to inquire about any big or small points.

We hope that this guide will be valuable to you and look forward to supporting you in any way we can!

If you have any questions about your purchase, feel free to contact us. We are always happy to help.