Ready-made licensed business: what benefits does the buyer receive along with customers, revenues, and infrastructure?

Purchasing a ready-made licensed business can be an alternative to creating a company and going through all the procedures from scratch. Along with the legal structure, the buyer can receive an already formed client base, history of activity, established business processes, infrastructure and, depending on the specific project, a valid financial or other regulatory license.

For an entrepreneur, this can mean significant time savings and the opportunity to quickly move to operational activities. However, purchasing a ready-made business is not just buying a company with a license. Before the deal, it is necessary to check what exactly is being transferred to the new owner, what condition the business is in and whether the buyer will be able to continue its activities after the change of ownership.

Depending on the structure of the deal, the buyer can receive not only a legal entity, but also a client base, contracts, bank accounts, payment infrastructure, software, domains, trademarks, personnel and other assets necessary to continue the business. This format may be especially relevant for regulated areas, where obtaining a license from scratch can take a significant amount of time and require the preparation of a large amount of documents and passing regulatory inspections.

What are the benefits for the buyer? The first advantage is time savings. When creating a business from scratch, an entrepreneur needs to go through several stages: register a company, form a corporate structure, open accounts, prepare internal policies, build operational processes and, if the activity is regulated, obtain an appropriate license.

Buying an already operating business allows some of these stages to be completed much faster, since the necessary structure already exists.

The second advantage is ready-made infrastructure. The buyer may not receive an empty company, but an already functioning business system: a website, software, CRM, payment solutions, agreements with partners, internal procedures, personnel and other elements that are necessary for work.

This is especially important for fintech, payment, financial services and other regulated businesses, where creating infrastructure from scratch can require significant resources.

The third advantage is an existing customer base. If an existing business is purchased, the buyer can get an already formed customer and partner base with it. This allows you not to start sales from scratch and use existing customer acquisition channels.

The fourth advantage is a history of income. Unlike a new company, a ready-made business can have a confirmed history of revenue, expenses, customer transactions and financial results. This is important for the buyer, as it allows you to assess the real economics of the business and understand how much the value declared by the seller corresponds to the actual indicators of the company.

However, the mere presence of income in the past does not guarantee that a similar result will be obtained after a change of ownership. That is why financial indicators must be analyzed together with the customer base, contracts, expenses and operating model.

What happens to the license after the purchase? This is one of the key issues when purchasing a licensed business. The presence of a license in a company does not mean that the buyer can automatically change the owner and continue operations without additional procedures. Depending on the jurisdiction and type of license, a change in shareholders, directors, beneficiaries or controlling persons may require prior approval from the regulator or notification to the relevant authority.

In some cases, a change of control may lead to the need to re-verify the owners, source of funds, business reputation and compliance of the company with regulatory requirements. Therefore, before the acquisition, it is necessary to check not only the fact of the license itself, but also the conditions of its validity and the possibility of transferring control over the licensed company.

That is why due diligence before purchasing a ready-made business should not be a formality, but one of the main stages of the transaction.

What to check before purchasing? Before purchasing a ready-made licensed business, it is necessary to comprehensively check the company and its activities. In particular:

- status and term of the license;

- possibility of changing owners and controlling persons;

- corporate structure;

- financial statements and income history;

- tax liabilities;

- bank accounts and payment infrastructure;

- contracts with clients and partners;

- the presence of litigation and other legal risks;

- compliance with AML/KYC and other regulatory requirements;

- rights to software, domains and trademarks;

- obligations to employees and counterparties;

- possible hidden debts and other obligations of the company.

It is especially necessary to carefully check companies operating in the financial sector. If licensed activities are transferred along with the business, the buyer actually acquires not only assets, but also responsibility for further compliance with regulatory requirements.

For an entrepreneur, the main advantage is the opportunity to purchase an already established system instead of creating it from scratch. You do not need to spend years building a reputation, looking for the first customers, building all the operations processes and go through each stage of launch independently, but a ready-made business does not always mean “ready profit”.

Therefore, the purchase of such a business must be considered as an investment that requires professional legal and financial due diligence.

What is important for the buyer? In short, together with a ready-made licensed business, the buyer can receive:

- a valid legal structure;

- a license and regulatory history;

- a client base;

- existing contracts;

- infrastructure and IT solutions;

- personnel and operational processes;

- a history of income and activity;

- a ready-made business model and the ability to scale the project faster.

Each of these points must be documented. That is why before signing a purchase and sale agreement, it is important to conduct a full legal due diligence and check what exactly the buyer gets with the company.

The Antwort Law team supports transactions for the acquisition of ready-made businesses, conducts legal due diligence, checks the corporate structure, licenses, contracts, assets and potential risks of the company.

In addition to supporting transactions, Antwort Law also offers ready-made companies for acquisition, in particular licensed businesses with an already formed corporate structure, infrastructure and necessary permits. This allows entrepreneurs not to waste time on creating a business and going through all the procedures from scratch, but to purchase an already prepared structure and start operating much faster.

If you are planning to purchase a ready-made licensed company or are looking for a ready-made business to start in your jurisdiction - contact Antwort Law. We will help you choose the right company, check its legal status and support the transaction at all stages.

Lidia Ivanova

International lawyer
Antwort Law