How to Buy a Business Abroad – the Key Things to Understand

How to Buy a Business Abroad – the Key Things to Understand

Planning to buy or start a new business is a complex process at any time. But buying a small business abroad introduces a whole new layer of considerations. Not only is the environment different, there are different business risks too. And the consequences of failing to get things right can be far more serious.

So, here’s a run-down of some important issues you should consider when buying a business outside the United States.

The language of business

As a US entrepreneur, you will be well aware of business-management issues like the importance of capital statements, the significance of tax depreciation, and the flow of events throughout the fiscal year. However, in the UK (another English-speaking nation), these matters are respectively termed ‘accounts’, ‘capital allowances’ and ‘financial year’. That’s just one small illustration of the confusion you may encounter when setting up and transacting business in another country.

Perhaps that’s already made you feel the need to consult your attorney about such things: Or should that be your notary, solicitor, lawyer or even barrister? And are you aware such terms have different meanings in some jurisdictions, while being completely unknown in others? So, the general advice is: Employ legal, financial and business experts who speak the local language and who are active in their profession within that territory.

Local rules and regulations

You will be aware that different laws exist in foreign countries. But in the same way that it takes experience and practice to understand the details of the US business landscape, you will need guidance from those ‘on the ground’, not only to observe the letter of the law in a new country, but also to learn about the optimum strategies you should adopt to get the best (legal) results for your business.

Apart from avoiding breaches of the civil, and maybe even criminal law once you start trading, there are also new tax laws, and new tax concepts, to get to grips with. If you fail to understand the tax implications of setting up a new business, then you run the risk of fatally undermining your entrepreneurial plans right from the outset.

If you are looking to move abroad, that’s perhaps why one of the best ways is to buy an existing business in the country you’re planning to relocate to. With that approach you will also be purchasing a ready-made blueprint covering the multitude of country-specific trading regulations and tax obligations, including tricky areas such as cross-border trading, which will come as part of the deal.

Culture and marketing

Unless you are merely seeking a trading-base which will forever remain independent of its locale, you will have to engage with the culture of your chosen business destination. To some extent, purchasing an existing business will insulate you as the owner from the gross errors which can flow from cultural misunderstandings. Nevertheless, you won’t be able to rely on your native-speaking employees for absolutely everything.

Marketing strategies can also cause unexpected problems unless you have local experts on your team. Unfortunately, Toyota’s branding of its MR2 sports car in French-speaking markets overlooked the fact that the French phonetic pronunciation of the brand-name gave the innocent automobile an unpleasant ring which totally destroyed the vehicle’s sale prospects.

Employing experts to localize your marketing materials might seem expensive if you have a limited setup budget, but it will surely pay off soon by delivering a more effective, tightly focused sales campaign. And are you really ready to risk a blunder which could terminate your project right from the outset?

Though more effort is required, you could also make a serious attempt to learn the local language and immerse yourself in the culture. Not only would that mean you could understand and monitor the progress of your company much more closely, it would also position you as someone with a genuine interest in your new country, rather than an ‘incomer’ just looking to develop a new source of income.

So, keep in mind that professionals who understand how to buy a business in a foreign country can prove an invaluable asset. They will answer questions, critique your strategies, and help you connect with suppliers and customers in your chosen territory. And having done the job many times before, they will also keep you wise to the kind of potential delays, overruns and hidden costs which might otherwise derail your plans.


By Bruce Hakutizwi, Director of North America for, the world’s largest online marketplace for buying and selling small and medium size businesses.