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How to profitably sell a ready-made business in the UAE

How to profitably sell a ready-made business in the UAE - Makebiz

In recent years, the demand for stable business in the United Arab Emirates has only been growing. This country attracts investors from all over the world, offering unique business opportunities. A strong economy, a loyal tax system, and a stable political environment attract the attention of both local and international investors. In the context of global economic instability, the demand for operating in the Emirates is only increasing, and this creates unique opportunities for those who want to sell their ready-made business.

Selling a company is a complex and responsible process that requires careful preparation and understanding of the market. In the UAE, selling a consistently profitable business may be easier than in Russia, due to the high demand for such companies and the specifics of this jurisdiction. In a rapidly developing economy and a favorable investment climate, many are looking for opportunities to generate income through intermediary activities in the field of purchase and sale of commercial enterprises. 

The Emirates confidently holds leading positions in international ratings such as Global Entrepreneurship Monitor.

Among the main advantages:

1. Loyal tax system: low rates – 5% VAT and 9% corporate tax. 

2. Developed infrastructure: modern transportation and logistics systems, high-quality office and commercial space.

3. Solvent population: high standard of living and a growing number of expats create a stable market for goods and services.

4. Growing sectors: construction, industry and technology continue to actively develop, opening up new opportunities for entrepreneurs.

5. Free economic zones allow you to operate with minimal restrictions and maximum benefits.

The key aspects that will help you successfully sell a company in the UAE

1. Understanding the market

Before you start selling, it is important to assess the current market situation. There is a high interest in stable and profitable businesses in the country, which opens up opportunities for sellers. Study which companies are in the greatest demand, and what factors influence their value.

2. Business preparation 

Before putting the company up for sale, make sure that it is ready for this process. We need to prepare:

  • Financial statements. Prepare all the necessary financial documents, including accounting reports for the last few years. Financial transparency will help potential buyers assess the real value of the business.
  • Legal purity. Make sure that all legal aspects are in order. This includes licenses, regulatory approvals, and other documents confirming the legality of your activities.
  • Registration of IP rights. Having registered trademarks, patents, and copyrights can significantly increase the cost.
  • Partnership information: data on cooperation with key suppliers and contractors, but without disclosure of confidential information.
  • Product and Service Description: A clear and detailed description of the products or services offered, as well as their competitive advantages.
  • Business plan. Develop it with forecasts for the future, which will demonstrate the growth and development potential of the company.
  • Information about employees. Specify the number of employees, their roles, and their skill level.

It is important to conduct an independent business assessment before selling. This will help determine its real value in the market and avoid inflated or lowered expectations. The assessment may include an analysis of assets, income, market position, and other factors.

3. Choosing a sales scheme

There are several ways to identify:

  • Full sale: The seller transfers all assets and liabilities to the new owner. This is the easiest and fastest way.
  • Sale of the company’s share.
  • Installment sales. This approach allows the buyer to make payments in installments. This can increase the number of potential buyers, but requires additional precautions.
  • Gradual sale. In this case, the business is sold in stages, which can be risky for the seller, especially if there are no clear terms of the contract.

4. Contract and pledge

When selling, it is important to draw up a detailed contract that protects your interests. If an installment purchase is being discussed, include the following elements in it:

— Specify the collateral that will serve as a guarantee of the fulfillment of the terms of the agreement. It is best if it is the property of the intended owner.

— To motivate making payments on time, add penalties for late payment or non-payment to the contract. This will help minimize the risks.

5. Search for a buyer

Identify the target audience for the sale. These can be both local and international investors. Use various channels to find buyers: 

  • Personal acquaintances. Use your connections on forums, business meetings, and networking sites to find potential buyers.
  • Brokers and consulting agencies. Contact professionals who have experience in this niche and can act as a reliable intermediary.
  • Professional communities. Contact foundations and non-profit organizations that help entrepreneurs in this field.
  • Auctions. Consider selling through auctions, which can attract a wide range of buyers.
  • Government agencies. Use the support of government organizations that can help you find buyers or provide information about the market.

Mistakes to avoid

When selling a company in the UAE, it is important not only to prepare the documents correctly, but also to avoid common mistakes that can negatively affect the transaction.

Mistake 1: Letting a potential buyer test the business. 

Although this may seem like a reasonable step, giving the opportunity to work for a company can lead to undesirable consequences. The buyer may use information about your organization to create a competing enterprise or simply not demonstrate a real interest.

Mistake 2: Inform in advance about the planned sale. 

Such an announcement may cause concern among employees, partners, and shareholders. This can lead to a decrease in the morale of the team and even information leakage, which will affect the value of the company in a negative way.

Mistake 3: Sell to a competitor. 

This can lead to copying of your assets and disruption of the transaction. Competitors can use the data they receive to improve their own offerings, which will ultimately undermine your position in the market.

Mistake 4: Incorrect wording in the contract. 

It is important to clearly define what is meant by the word «company». For example, licenses, trademarks, brand name, and other assets. Incorrect wording can lead to legal disputes and misunderstandings between the parties.

What is the resale of a ready-made business?

This is a process in which a broker or intermediary helps company owners sell their businesses and buyers find suitable investment opportunities. Brokers play an important role in ensuring the security and success of transactions, as they have the necessary knowledge and experience to evaluate the business, prepare documents and conduct negotiations.

When choosing a business for resale, it is important to consider its profitability. You can select:

1. Highly profitable — such enterprises ensure a return on investment in 1-6 months. These are often firms in fast-growing sectors such as technology or services.

2. Medium—profitable — here the payback occurs within 7-12 months. Such enterprises may be more stable, but they require careful evaluation to understand their potential.

3. Low—margin — payback can take more than a year. These businesses may be interesting for investors who are ready for long-term investments, but selling them may be more difficult.

Due to the peculiarities of the UAE’s mentality and business culture, most transactions are carried out face to face. This means that it is worth looking for a business for sale not on the Internet, but through personal acquaintances, business meetings and specialized forums. Participate in conferences, exhibitions, and forums where entrepreneurs and investors gather. This is a great opportunity to establish contacts and find potential clients. It is also useful to partner with consulting and marketing agencies that recommend you to their clients for a certain percentage.

Selling a ready-made business in the Emirates can be a profitable and successful process if approached wisely and with careful preparation.  Understanding the market and choosing the right sales strategy play a key role in achieving the desired result. Success in the field of resale depends on the ability to analyze and evaluate different types of companies, as well as on the ability to establish contacts and build trusting relationships. Using the strategies described above, you can significantly increase your chances of making profitable deals.

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