Step-by-step plan for taking over a business

Have you not found a business yet? Or do you have a business in mind, but you are not sure if it is right for you? Create a search profile for yourself. In a search profile, you describe what kind of business you want to take over. Think about what you are good at, the challenges you want to take on, and how much money you have available for a takeover. A search profile will make finding a business easier. It also helps you prepare for negotiations.

Taking over a business is a complicated process. For example, you must sign a purchase contract and the value of the business must be calculated. That is why guidance during the business takeover is sensible. The Netherlands Chamber of Commerce KVK advises about business takeovers.

Look for a business that fits you according to your search profile and approach the owners.

The seller has to give you confidential information about their business. Because this information is only for you, they will ask you to sign a confidentiality statement. A confidentiality statement is also called a non-disclosure agreement (NDA).

With a memorandum of sale you gain insight into the business and the value of the business. The memorandum of sale includes the history of the business, organisational structure, and financial situation.

The value of a business is calculated based on concrete assets. For example, company vehicles, equipment, and inventory. But often a business has extra value such as customer relationships and brand names. This is known as goodwill and also influences the value of a business.

There are different ways of valuing a business. You can use the balance sheet, current profit, or the goodwill. But whatever the asking price may be, the actual price is always determined after negotiation.

Record agreements that you make during business takeover negotiations in a declaration of intent. Keep in mind that the agreements in a declaration of intent are binding for both you and the seller.

You must check if the information the seller gave you is correct. For example, a company's figures and expectations. This means investigating the administration of a business. This is called due diligence. You check a company's records and other business information. The seller should share important and accurate information.

A tax consultant or accountant can help you with this.

Taking over a business automatically means taking over the staff. You cannot change anything about their rights and obligations. And you have to inform the Netherlands Tax Administration (Belastingdienst) that you will take over the staff. The previous owner stays jointly responsible with you for honouring their part of the employment contract for 1 year.

Read more about staff and business takeover.

Decide during negotiations which aspects of the business you do or do not take over. For example:

• Business premises. Do you want to take over the business premises? See if it is possible to take over the leasing contract with subrogation. This means that the new owner may take the old owner's place in the lease. The lease continues with the same terms and conditions and agreements.
• Intellectual property. For example, ask whether the company name is registered as a trademark. And whether there is a patent for a technical invention.
• Product liability and granted guarantees
• Ongoing contracts,for example with suppliers and clients
• Phone numbers and email addresses of the business
• Ongoing subscriptions, such as for phones, internet, and window cleaners
• Customer data
• Pending lawsuits
• Credits and debts
• Permits

When you take over a business, you can use your own money. You can also finance the business takeover with other financing options. For example, a subordinated loan with the seller or lessor. With these forms of financing, the seller often stays involved with the business for a period of time. Make clear agreements about financing to prevent trouble afterwards.

Is the sale almost complete? Then you can draw up a purchase agreement together with the seller. You use the declaration of intent (step 7) as a basis. You can include an annulment clause in the purchase agreement.

If you are purchasing a sole proprietorship (eenmanszaak) or a general partnership (vennootschap onder firma, VOF), the business will get a new KVK number. For this, make an appointment at KVK to register your new business in the Business Register. KVK will pass on your data to the Tax Administration. You do not need to register with them. When the Tax Administration registers you as an entrepreneur in their administration, you get your VAT-ID and the VAT number.

All VAT arrangements that apply to the business, pass on to you (in Dutch). They are not person-related, but related to the business. That is why the seller cannot add VAT to the selling price. The seller will stay liable for tax debts until the takeover of the business.