• Skip to primary navigation
  • Skip to main content
  • Skip to footer
Cekindo Business Center

Cekindo Business Center

Business Expert in Indonesia

  • Homepage
  • About Us
    • Client’s testimonials
    • Company Profile
    • Terms & Conditions
  • Our Services
    • Virtual Office
    • Co-working and Private Office
    • Business Visa
    • Due Diligence Solutions
    • Shelf Company
    • Company Registration
    • Foreign-Owned and Local Nominee Company
    • Representative office
  • Gallery
  • Blog
  • FAQ
  • Contact
  • ENEN
    • ENEN
    • IDID

Risks When Buying a Company in Indonesia

You are here: Home / Blog / Risks When Buying a Company in Indonesia

Establishing a new company in Indonesia can be a long and painful process. Unless you are strongly convinced of the bright future of your new business, and the expectation is supported by proper market analysis, taking over an existing company can be a safer option. However, as always, some basic precautions should be taken.

REASONS FOR BUYING A COMPANY

Start a business from scratch is difficult and doing it in a foreign country is twice as hard. The bureaucratic load is significant and familiarize yourself with new environment takes time. The above-average sales reached back home do not guarantee the same success somewhere else.

Your profit can shrink significantly due to the different consumer behaviour, misapprehension of your customers’ needs, lower purchasing power and many other factors that are be hard to evaluate from abroad. Whether the product will become a best seller or it will turn into a dead loss is never clear beforehand.

Taking over a well-established company with proven history will reduce unnecessary trial-and-error learning process and its cost. But there is more you can gain.

Existing customer base

Arguably the most precious asset of any company that has been often built over the years. Make sure that you cater not only to your new customers that are interested in your current portfolio of products and services but also to the loyal clients who have been attached to the brand for a long time.

Offices, inventory and other facilities

Using existing offices that are equipped and ready to use saves a lot of money and time. However, it is important to check the current lease agreements and other details. If inventory is part of the deal, make sure you do not pay for something that needs to be written off anyway. Outdated software or a large stock of perishable good is not a wise investment.

Knowhow

Purchasing a company will give you an insight into the market through its performance records, market analysis and other documents accumulated in the past. Moreover, long-time employees are another valuable source of information.

DO NOT RISK AND AVOID BUYING A PIG IN A POKE

Besides indisputable benefits, there is a row of questions to be asked before you commit to buy a running enterprise. An established company that has been around for a while comes as a package. You may like some parts of it and dislike the others, but you need to take them all.

Therefore it is important to scrutinize the history, current condition and the future potential for growth of the business. That is not an easy task and a proper due diligence investigation carried out by professionals such as Cekindo is a vital part of the purchasing process.

It helps you to assess risks that can be sometimes over-looked and discover even the less visible problems that can emerge as an unpleasant surprise later on.

What Needs to Be Checked

The most basic question that can direct further background check is – why in the first place the company is for sale. There might be legitimate reasons behind the intentions to cash someone’s long-time effort but also an attempt to get rid of a business that is in the doldrums.  We strongly recommend screening the following areas thoroughly to prevent every possible risk.

Financial health

Your goal, as a future owner, is to pay for assets of the company, not for its debts. Even though you have a financial balance at your disposal, some debts can be easily hidden off the balance sheet. It worth the effort to carry out an in-depth audit and examine all the debts and loans to get a realistic number of the company profitability in the coming years.

Legal history and reputation

Does the company compile with all required laws and regulations? Were there any lawsuits against the company in the past? What is its reputation? Even though the current clients might help to keep a steady profit, it will be hard to appeal to new customers if your credibility is harmed. Make sure you know the whole story before signing up the contract.

Management and employees

Highly motivated management and skilful employees can make the entrepreneur’s life easier. Unfortunately, more often than not some personnel changes are necessary in order to build a strong team.

Nevertheless, laying off the staff and terminating contracts is not cost effective and recruiting within some highly specialized profession is difficult in Indonesia. A deep personnel audit is a key to keep the right people within the company.

For more information about in-depth corporate checks of businesses in Indonesia, do not hesitate to contact experts from Cekindo. Cekindo has been helping foreign investors expanding to the Indonesian market for almost a decade. We will take care of the legality while you can focus on your core activities.

Related Posts

How a Virtual Assistant is Beneficial for Your Business in Indonesia

How a Virtual Assistant is Beneficial for Your Business in Indonesia

Why a Business Consultant Must Take Advantage of a Virtual Office in Indonesia

Why a Business Consultant Must Take Advantage of a Virtual Office in Indonesia

Contact Us

    Footer

    Jakarta – Slipi

    Grand Slipi Tower 9th fl. (Unit G)

    Jl. Letjen. S. Parman Kav. 22-24

    Palmerah, West Jakarta 11480

    Indonesia

    +6221 80660900

    Jakarta – Kuningan

    AXA Tower 36th fl. Kuningan City

    Jl. Prof. Dr. Satrio Kav. 18

    South Jakarta 12940

    Indonesia

    +6221 50101510

    Jakarta – Kebon Jeruk

    Business Park Kebon Jeruk, Blok H1-H2

    Jl. Raya Meruya Ilir No.88

    Jakarta Barat 11620, Indonesia

    +622180660900

    Bali

    Istana Kuta Galeria

    Blok BW 2 No. 3A

    Jl. Patih Jelantik, Kuta, Badung

    Bali 80361, Indonesia

    +62361 2090200

    Semarang

    Ruko Peterongan Plaza Blok C-2

    (in front of Sri Ratu Peterongan)

    Jl. MT. Haryono No.719

    Semarang 50242, Indonesia

    +6224 86001600

    Privacy Policy · © 2021 · Cekindo Business Center

    Pre Order Visa Promo - Popup Banner

    ×
    X
    REGULATION UPDATES:
    Indonesia has closed its borders to foreign travelers until 8th February 2021. With the exceptions of foreigners with KITAS, KITAP, and diplomatic permits.
    The Ministry of Manpower has temporarily suspended all new foreign Visas and KITAS applications until 8th February 2021.
    Employed Foreigners (holding an existing and valid KITAS) who are currently in Indonesia, may file for an extension under their Employer.
    The immigration office in Denpasar (Bali) is limiting Visa extensions to 4 times. To continue staying in Bali, Foreigners can apply for a new Single-Entry Business Visa in Bali. The process takes up to 14 days and the overstay penalty is 1Mil IDR a day.
    If you require more guidance, please get in touch with our teams for the latest updates.
    Further details on COVID19.go.id