[somedude]

Anyone here bought an established business in Hong Kong?

Bar, Restaurant etc.?

Why would someone sell a business if its making easy money? Do the locals try to cover up the financials?

[Boris]

If your asking that question it doesn't bode well for your business experience. Due diligence is a basic skill in business acquisition.

[dipper]

There are many reasons why someone might wish to sell a business which was making money. For example:

1) Whilst the business may be making money it is probably not 'easy' money (as you describe it). It may well involve long hours, hard work and stress and the owner may be looking for a change in lifestyle, spending more time with the family etc.

2) The owner may wish to move overseas.

3) It may have been so profitable that the owner can afford to sell up and retire/do something more interesting with the rest of their lives.

I'm sure there are many more possible reasons.

As to whether 'the locals try to cover up the financials' then, as Boris points out, you should of course do a proper business analysis before buying, regardless of who you are buying from. Generalisations about 'the locals' are not really going to help you, a detailed understanding of the particular business that you are considering buying is what you need.

[KnowItAll]

Been very involved over the last six month with something similar.

Good reasons for wanting out .. burn out, leaving town, found something new to do.

Anything that is similar to a bar or restaurant should have complete and audited financials available as they should be a limited company. Insist on an interim financial statement as most audited statements will be through to financial year end.

Other than financials .. do operational due diligence too.

Seek advice from an accountant and a lawyer on how to proceed.

[somedude]

Thanks guys. Good advice provided.

Next step is to find profitable businesses and I'll contact the respective advisors on proceeding.

Lots of money invested, and I don't want to see my hard earnt money go down the drain on a dodgy business.

[Football16]

Originally Posted by KnowItAll

Been very involved over the last six month with something similar.

Good reasons for wanting out .. burn out, leaving town, found something new to do.

Anything that is similar to a bar or restaurant should have complete and audited financials available as they should be a limited company. Insist on an interim financial statement as most audited statements will be through to financial year end.

Other than financials .. do operational due diligence too.

Seek advice from an accountant and a lawyer on how to proceed.

I am not experienced in this market but putting a slightly different twist to Knowitall's very sensible suggestion above, I'd suggest maybe another good question might be which accountant or firm might be a good one to speak with regarding businesses that might be good and be up for sale.

If you find a good accounting firm that handles small and medium business accounts you might find that they have a client or two who might be interested in bailing out of a decent business.

I don't know about HK but this is an option in other places. I also am unaware if there are brokers here in HK who put buyers and sellers together.

One option is always finding a decent franchise which allows you to actually make money if you work hard at it, versus just give you a living wage for 70 hours a week and 24/7 responsibility which I saw as a bit of a trend in Canada when I was looking to buy some franchises with a guy in the business already. He had a lucrative deal but they changed the new agreements to make it impossible to get to the sales and revenue levels where he didn't share a disproportionate amount with the company that he was enjoying in the past. Now they have both hands in your pockets and structure the deals to make sure you can't hit super levels and keep more of the money for yourself!

[KnowItAll]

Football - http://www.hkbi.com/index.aspx?lang=eng

These guys do business brokering .. no clue how good or bad they are.

[Football16]

Originally Posted by KnowItAll

Football - http://www.hkbi.com/index.aspx?lang=eng

These guys do business brokering .. no clue how good or bad they are.

Funny thing. My business associate went to the event listed for HKUMBA Entrepreneurship meeting last week that Edwin Lee spoke at that is in the link you posted.

The key messages that my friend got from the presentation could be summed up as follows:

> buy from them as they only list profitable businesses.
> his clients have a mere 15% failure rate.
> he will convince you to give it 5 years before bailing.

He felt he is okay but my friend is more of an entrepreneur and doesn't like to hear - buy this operating business from me. The only caveat is that hanging in for five years might just be a way to avoid showing a higher failure rate. His views not mine.

[Crocodile]

Originally Posted by somedude

Anyone here bought an established business in Hong Kong?

Bar, Restaurant etc.?

Why would someone sell a business if its making easy money? Do the locals try to cover up the financials?

Buying a business in HK is no different to buying a business anywhere else.

All business owners who are selling will try to make the business look as attractive as possible. Buying a bar or restaurant only makes things more cloudy.

Also, depends on how big the business is. Financials can be manipulated quite easily to make a company look good, but tax returns are a different story. I would definitely be wanting to see tax returns for the previous five years - people tend not to inflate their taxable income.

Also, don't put all your faith in accountants, lawyers, consultants, advisors, etc. It is your money, not theirs, so if I was you I would be reading every book about buying businesses I could get my hands on.

Good Luck.

[cb1118]

if you have money to buy a business, why not to do franchise.
I have a friend who runs the franchise and one of them (for example) is DOOM (Australia).
**there is no DOOM restaurant in HK yet...
you may PM me if you want to talk to him

or you may consider to start your own business?