Planning a merger or acquisition?

If you want to become an entrepreneur, buying a company is a good option. By buying a company that is already in operation, you get many things ready, and you don't have to worry about all the stages of setting up, for example.

Buying a company is a convenient way to become an entrepreneur in many ways, as the finished company often comes with, for example, suitable production equipment, notoriety and customer base. Acquisitions are also beneficial for the national economy and employment. For example, when an aging entrepreneur gives up his or her business, a continuing new entrepreneur can secure jobs and maintain skills and customer relationships.

According to the 2021 SME Barometer, about 85,000 companies will change owners in Finland over the next five years. About one in three of Finland’s small and medium-sized enterprises is planning to change ownership in the coming years.

For example, you can get information about buying a company from Finnvera, banks or numerous store locations and services.

If you are considering buying a company, you should contact Suomen Yrittäjät in or near your area. There are change of ownership coordinators in the regional organizations who know how to tip over the companies for sale.

You can also find companies for sale in various services. One of these is Yrityspörssi.fi. Other trading venues are for example Yrityskaupat.net ja Firmakauppa.fi (in Finnish). In addition, the search engines provide a number of other places to trade and broker, as well as free and paid services.

You can research the above locations for sales and brokerage and find out if a business in your area would need a successor. You should openly talk about your intentions, for example, in your circle of acquaintances, as opportunities may open up surprisingly close. For example, according to a study conducted by Seinäjoki University of Applied Sciences, in 60 percent of acquisitions, the buyer and seller know each other in advance, and in as many as 80 percent of cases they operate in the same or a neighboring locality. You can also contact the company you are interested in directly, where a change of ownership may be a topical issue.

It is the price at which the seller is willing to give up, the buyer is willing to pay and the financier is willing to finance. A lot of things affect the price of the company you buy. Particular attention should be paid to the fact that the final price may differ from the tax fair value of the company, which often has tax consequences. You can use search engines to find online counters and consulting services to help you evaluate.

See how Risto Tuunanen and Reetta Sahinjoki went through the process of buying a company.

How is the value determined?

Determining the value of a business to be acquired is always a case-by-case process and is influenced by a great many factors. The value of a company is always buyer-specific because the buyer makes the future of the company and its value. In taxation, the fair value of a company is determined using the substance and return value methods. It makes sense to rely on the help of a professional to determine the value of a company, but it is a good idea to familiarize yourself with the matter yourself.

Determination of value

How do I finance the acquisition?

Only a few acquisitions result in the buyer paying the full amount of the transaction from his own funds. Loan money is almost always needed for an acquisition. You should ask about financing opportunities from banks and Finnvera. Be sure to request financing offers from more than one bank.

Financing

What do the business practices of the acquisition mean?

Roughly speaking, there are two ways to make an acquisition:
1) selling the business,
2) by selling shares or company shares.
The method chosen may affect who is the seller, what responsibilities are transferred to the buyer and what tax consequences the transaction has.

How does the generational change take place?

A change of generation is a subtype and method of change of ownership and thus an option to become an entrepreneur. When a successor to a company is found in close circle, there are often many winners: a generational change benefits the transferor, the start-up and the company itself. The best results come from good planning and open speaking.

Generational change

Taxation of acquisitions, changes of ownership and generations

Taxes on capital gains are paid by the person whose property is sold. The trade of a business name is always a business transaction, in which case the seller is the entrepreneur himself. In other forms of business, the seller can be either the company or the entrepreneur himself, depending on the way of trading and the ownership structure. In this case, the tax consequences can also be imposed on either the company or the entrepreneur himself. The buyer should consider whether it is more appropriate to purchase the company’s business or the company’s shares or stocks. The method chosen is relevant to the responsibilities and tax consequences transferred in the transaction, and therefore it does not always matter which of the implementation methods is chosen.

Taxation of acquisitions
See how Jari Taimi went through the process of selling his company.

What kind of expert help is available?

You can find all the information related to starting your own business free of charge, for example, in our guide on starting a business, on the website of the Finnish Enterprise Agencies, on the Finnish state-owned financing company Finnvera and on the website of Suomi.fi.

Own acquisitions are a risk, and you should seriously consider seeking the help of industry experts. The use of a professional ensures the success of the acquisition without hindsight and is in the interests of all parties – the buyer, the seller and the financier.

However, it is a good idea for the person planning the acquisition to ensure that the expert used has experience specifically in the change of ownership and the resources to successfully complete the acquisition. Generational changes within the family often require different skills than selling a business to an outsider. It is a good idea to check which specialty the expert is more representative of.

Members of Suomen Yrittäjät can also take advantage of the advisory service in matters of change of ownership.

The regional and industry associations of Suomen Yrittäjät have contacts with experts on change of ownership.

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