Singapore Businesses For Sale: How To Improve Your Chance Of Buying A Business In Singapore

Mac
May 31
6 min read

Updated: Jun 12

So, you're ready to take the plunge and become your own boss? Buying business in Singapore or Malaysia can be a fantastic way to hit the ground running, leveraging existing infrastructure, customer bases, and revenue streams. However, navigating the business acquisition landscape in this region requires significant amount of time and thoughtful execution.

At Fey Day, we understand the excitement and the potential challenges that come with this significant decision. That's why we've put together this guide to help aspiring entrepreneurs like you to improve your chances of successfully buying a business in Singapore and Malaysia.

Insight on Entrepreneurship through Acquisition (ETA)

More than 80% of the aspiring entrepreneurs ended up not buying business in Singapore or Malaysia after 1 to 2 years of searches.
The most common reasons for falling to acquire a business are unrealistic expectation, lacking the courage to close the deal and lacking of funding.
Most acquirers are uninformed, lacks market intelligence and skills needed to make a successful acquisition.
There is a lack of funding facilities for individuals to acquire a business at their personal capacity in Singapore.
Searching for suitable business to acquire is time consuming and can potentially be a full time job.
You do not acquire a business on $0 upfront payment. This is a myth!
Taking over an existing business and operating it is not a child’s play. It does not guarantee you success!
The perfect business does not exist. Even if it does exist in your own perception, you might not be able to afford it!
Getting input from people who have done it before goes a long way. Network today!
Set a realistic budget in mind for the acquisition.
Speed matters!

Closing a deal is a lot harder than it looks!

Boosting Your Chances: Actionable Tips for Aspiring Buyers

Define Your "Why" and Your "What": Before diving into listings, take a step back and clearly define your goals. Why do you want to buy a business? Is it for financial independence, pursuing a passion, or strategic expansion?

If you are planning to acquire a small business for passive income, then you might be looking at the wrong asset class. Acquiring a small business to replace your day job or pursing active wealth creation is a viable strategy. There are many people who have done it successfully before.

If you are an individual looking to buy a business, you can easily buy a small business with a budget of SGD $200k and upwards. The types of business, quality of the business and earnings will be shaped directly by the budget you have. Imagine buying a property, where there are different categories of it. Same with business as well, although the lines are not clearly drawn.

Types of Properties For Sale

HDB
Condominium
Landed Property
Shophouse
Industrial
Office

Types of Businesses For Sale

Retail
F&B
Consumer services e.g. spa, clinic, tuition, gym, dental, etc
E-commerce e.g. private label, drop-shipping, marketplace
Online Marketplace
Manufacturing
Franchising
Saas (Software as a service)
System integrator
Event Management
Agency Business e.g. Marketing, Recruitment, Corporate Secretarial, etc
Content Creation Agency
Trading

Buy a Business in Singapore and Malaysia

What kind of business are you looking for? Consider your skills, experience, interests, and risk tolerance. Are you interested in F&B, retail, services, or perhaps an online business? Specifying your criteria will save you valuable time and focus your search. Don’t make the mistake of constantly pivoting your criteria. Your time and energy is finite.

A person who has no sales experience and not comfortable with sales should not acquire a B2B business with an enterprise value of < $3 million. Likewise, a person who is unable to commit long hours should think twice about running a small scale F&B or retail business. Or someone who doesn’t understand consumer behaviour and trend should think twice about B2C business.

Do not expect a perfect business. In fact, you should always look out for businesses that you can optimize easily. This way, when you take over the business, you can easily improve the business by working on the low hanging fruits.

Conduct Thorough Market Research (Localised Focus): Don't just rely on general trends. Understand the specific market dynamics in Singapore or the particular region of Malaysia you're considering.

For example, rental in Singapore tend to be high, and the renewal terms is every 3 years with significant rental increase. Moreover hiring can be a pain, coupled with intense competition from Chinese F&B brands. As such, you might want to think twice before jumping into F&B and retail sector.

Whereas in Penang, it tends to attract foreign tourist from neighbouring countries who are foodie. Rental is comparatively low and small businesses has no problem with hiring, compared to Singapore.

Identify promising industries: Which sectors are experiencing growth in Singapore? Which will face headwind in the coming years? What are the emerging opportunities in Kuala Lumpur or Johor Bahru or Penang?

Analyse the competition: Who are the key players? What are their strengths and weaknesses? How can a potential acquisition gain a competitive advantage in the existing landscape? How do the existing players compete on? Purely on pricing, or differentiated services?

Stay informed about local regulations: Understand the business registration processes, licensing requirements, and any specific regulations relevant to your target industry in both countries. Resources like the Accounting and Corporate Regulatory Authority (ACRA) in Singapore and the Companies Commission of Malaysia (SSM) are invaluable.

Network Strategically: Buying a business often involves word-of-mouth and connections. You have a unique advantage, if you have access to deals that are not accessible to others. In this case, you have to ask yourself how do you go about getting access to proprietary deals (off the table).

Engage with business brokerage firm: Reputable business brokers in Singapore and Malaysia have extensive networks and can provide access to off-market opportunities. Are the Singapore business brokers or M&A advisors doing these full-time or on a part time basis?

Attend industry events: Connect with business owners, investors, and professionals in your target sector. Trade show, exhibition, professional bodies are a good start. You can always visit Suntec City Convention Hall or Expo to see what are the upcoming events.

Leverage online platforms: Explore websites and online communities that are commonly used by business for sale in Singapore and Malaysia. Think Smergers, businessforsale.sg , etc.

Secure Your Finances: Buying a business requires significant capital. How much do you have in liquid cash? If it’s less than SGD $200k, you might be better off starting your own business. (Unless you are able to rope in investors)

Explore funding options: Research available financing options in Singapore and Malaysia, including bank loans, government grants (if applicable), and private equity. Be prepared to present a solid business plan. If you are currently a business owner and looking to acquire a business, there is a grant from Enterprise Singapore presently for M&A purposes.

Get pre-approved for financing or your funds ready: This will demonstrate your seriousness to sellers and shorten the entire acquisition process.

Master Due Diligence: This is a critical step to avoid costly mistakes. Please don’t try to skimp on this expense, as you may end up saving a penny and losing a pound.

Scrutinise financial records: Carefully review profit and loss statements, balance sheets, tax returns, and cash flow projections. Engage an accountant familiar with Singaporean or Malaysian accounting standards.

Assess operational aspects: Understand the business's processes, supply chains, customer relationships, and employee contracts.

Legal review is essential: Engage a lawyer experienced in business acquisitions in Singapore or Malaysia to review all contracts and ensure compliance with local laws. Pay close attention to transfer of ownership, intellectual property, and lease agreements.

Negotiate Wisely: Once you've identified a suitable business, be prepared to negotiate the terms of the sale. Be flexible in terms of the deal structure and owners’ requirement. Whether it’s the upfront cash payment, earn-out, seller financing or using bank facilities.

Understand the seller's motivations: Why are they selling? This can provide valuable insights during negotiations. It’s common for business owners to exit their business owners due personal reasons. It's important to know innately how they look into the deal itself.

Be realistic with your offer: Base your valuation on thorough due diligence and market comparisons. Make sure you do not attempt to low-ball the seller. Focus on value, not just price. Consider factors beyond the selling price, such as the value of assets, goodwill, and future growth potential.

Seek Local Expertise: Navigating the legal, financial, and cultural nuances of buying a business in Singapore or Malaysia can be complex. For many buyers, they may lack the cultural understanding and communication skills to manage the deal negotiation. Using a business broker in Singapore or Malaysia can help.

Your Journey Starts Here

Buying a business in Singapore or Malaysia is an exciting and potentially rewarding venture. By approaching the process with careful planning, thorough research, and a willingness to seek expert guidance, you can significantly improve your chances of finding the right opportunity.

At Fey Day, we are here to support you on your entrepreneurial journey. Explore our sg business for sale listings to take the first step towards owning your dream business in this dynamic region. Good luck!