Step-by-step plan: Taking over a business
Taking over an existing business has benefits in comparison to starting a new business. For instance: you are assured of existing customers, brand awareness, and business premises. This step-by-step plan sets out what you need to do when you take over a business in the Netherlands.
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.
Taking over a farm or plant growing business?
Are you looking to take over an agricultural or horticultural (family) business? Check out Bedrijfsovernamewijzer.nl. This online platform offers practical information on taking over a business and tells you where to go for advice. For example, on financing and making choices in family businesses.
Bedrijfsovernamewijzer.nl is an initiative of the Ministry for Agriculture, Fisheries, Food Security, and Nature (LVVN).
Look for a business that fits you according to your search profile and approach the owners.
Check the person you want to do business with
Check in advance who you might be doing business with. For example, check your business partner's extract from the Business Register.
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.
Translate the financial figures to your situation
You can translate the financial figures from the sales memorandum to your situation. This is called normalising and means you estimate the costs and revenues if you were the owner. With a profit calculation suited to your situation, you can determine whether taking over the business is attractive for you. For example, your turnover may be higher or lower than that of the current owner. Or operating costs may be higher in your situation, for example if you are going to borrow money for the acquisition.
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. But whatever the asking price may be, you always decide on the actual price together.
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
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.
How to take over a private limited company (BV)
You can take over a besloten vennootschap (BV) in 2 ways:
- Takeover of shares The capital of a BV is divided into shares. If you are taking over a BV, the shares are passed on to you. For this, you need a notarial deed. This ensures that everything that belongs to the business is passed on to you.
- Assets and liabilities transaction With this method, you can decide together with the seller what you take over. You do not take over their shares, but choose how to continue the business on your own terms. This is comparable to taking over an eenmanszaak or a VOF.
The seller is not allowed to add VAT to the selling price. The seller will stay liable for tax debts until the takeover of the business. All VAT arrangements that apply to the business, pass on to you (in Dutch). They are not person-related, but related to the business.
Exceptions when taking over a family business
The takeover process for a family business or your employer's business is the same as the takeover of any other business. But are you taking over the business due to a gift (in Dutch) or inheritance? Then you need to pay taxes over this and you need to notify the Tax Administration. You may be able to use the business succession scheme (BOR). This means you pay no or less inheritance or gift tax. There are several conditions you must meet. For example, you have to continue the business for at least 3 years. This is called the voortzettingsvereiste in Dutch. Do you receive a company as a gift? Then you only qualify for tax relief if you are 21 or older.
Are you taking over a business from your co-owner or employer? Then there are schemes (in Dutch) for the income tax and transfer tax.
Video: Taking over a business
Are you planning to take over a business? Watch this video for tips on things you will have to deal with. From finding a suitable business to the takeover contract.