Takeovers - Sweden
EU/EEA citizens have the right to acquire businesses in Sweden. This is normally done by means of an agreement in which purchasers and vendors agree on the terms and conditions for such a transfer.
Types of takeover
Assets and liabilities deal
A purchase of assets and liabilities means buying just the assets. An assets and liabilities deal may cover all or only selected parts of the assets, such as inventories, equipment, customer lists or trademarks. If you continue with the business, the employees are entitled to remain.
If it turns out that what you have purchased is not worth what you assumed when you bought it, the Swedish Sale of Goods Act (Köplagen) states that you can report the error and have it corrected.
With an assets and liabilities deal, it is easier to gain an overview of what you are buying and what liabilities this may entail. You can continue the business without any liability for earlier transactions or commitments. The vendor retains his company.
An alternative to purchasing assets and liabilities is to acquire a bankrupt estate. If you know what you are looking for, you can contact an administrator directly. Acquiring a bankrupt estate demands quick decisions and access to ready cash.
All types of company can acquire a business by purchasing its assets and liabilities.
Purchase of shares
You can purchase all the shares in a limited company, or shares in a partnership. You then take over the whole business with its assets and liabilities, its staff and any agreements it has entered into, and continue to run the company under the same name and corporate identity number. With a transfer of shares, the company's activities continue as before. All its staff are therefore included in the purchase. Their contracts of employment still apply even though the company is being run by a new owner.
When you take over the whole company, which you do when you purchase all the shares, you are liable for any errors or shortcomings that may arise as a result of the company's earlier activities. For example, the company may have sold goods that turn out to be defective.
If you have to borrow money to purchase the shares in a company, it may be better to buy them through another company that you own. You can form a new company to act as the buyer, for example. Ask for help from an advisor to find the best solution.
Both companies of all kinds and private individuals can purchase a company by buying all its shares.
Step-by-step guide to takeovers
The first rule when purchasing a business is to thoroughly examine the company you wish to buy, particularly if it is a limited company you are acquiring, and not just its assets and liabilities.
Start by finding out more about the company for yourself. It is easier to get a reliable impression as a buyer if you have picked up a little knowledge of the company beforehand. Then you can contact the vendor, who can provide you with further information.
Legal advisors prepare ownership transfer agreements and assess the valuation and tax issues. They also assess client and employment contracts and any testament and gift issues.
Commercial company brokers transfer companies that are for sale. They value the business, draw up a company description, find interested parties and business approaches and take part in acquisition negotiations.
Swedish banks can also have businesses for sale and offer various financing solutions for a business acquisition, as well as helping with valuations and legal issues.
A thorough analysis of the position within a company is called 'due diligence' and is conducted on behalf of the buyer. A due diligence exercise may be carried out by an auditor, a lawyer or another expert on company acquisitions.
Even if your resources are limited and the company you are intending to buy is small, you must be sure to carry out a proper examination of the business.
What do you need to look into?
First of all, you need to check that the company is right for you, look into its position in the market, and whether there are any claims or other matters affecting the business.
You should also examine its results, resources, organisation, and any contracts and agreements entered into.
When buying a restaurant or a shop, for example, it is a good idea to investigate why the owner is selling. It may be that a competitor is setting up or that the owner of the building has other plans.
Start with the accounts
If you are planning to buy a limited company, you can start by studying last year's accounts. You can obtain these from the seller or their representative, or you can request them from the Swedish Companies Registration Office (Bolagsverket).
If the vendor is a sole trader or a partnership, there will be no public accounts. You need to request them from the vendor. You should also look at the balance sheet and profit and loss accounts.
Negotiate with the seller
Before purchasing a business, you need to negotiate the price and the conditions of the transfer with the seller. It is important for you, the buyer, to have formed your own opinion as to how the business should be run in the future. You should also have drawn up a business plan with a budget to form the basis for your negotiating position.
The acquisition of a company requires a signed purchase agreement. Ensure that you have your own advisor to help you with the contract. Make sure that all important agreements and issues are covered by the written contract.
After taking over, you should inform all your suppliers, customers, banks and competitors that you are the new owner. You should also draw up a trial balance and check that you really have got what you paid for.
Retiring business owners need to plan the transfer of their business in advance.
Some standard requirements to be completed when taking over a business are the same as when setting up a new business.
The business portal verksamt.se provides practical guidance to businesses.
Check also the legislation on this topic in: