Foreign business people who intend to acquire an already opened business entity in the country are recommended to hire specialists who effectuate company due diligence procedures in Estonia, in order to make sure that the company about to be purchased abides by the local legislation entirely.
Due diligence is a process that implies seeking advice from company formation professionals in Estonia who can verify on behalf of the foreign entrepreneur if a business is traded legally and in the best interest of the buyer. If you wish to acquire a business in Estonia, our Estonian company formation advisers are able to offer the appropriate guidance on this matter.
Standard company due diligence checklist in Estonia
When performing the due diligence on a company in Estonia that is about to be bought, this process should include the following important information:
1. Business organization data: these refer to the certificate, Articles of Incorporation, as well as the bylaws and amendments of the corporation and others;
2. General business data: they may contain an up-to-date business plan, organizational charts and description of the management’s duties etc;
3. Financial information: these are comprised of copies of all yearly accounting reports for the last five years, tax returns for the last five years, enlisting and detailed data on all adjustments to operating income and so on;
4. Properties and leases: they include pieces of real estate, a detailed description of all branches, offices and other business facilities or real estate, leased or occupied by the company in question and other aspects;
5. Other information: our Estonian company formation professionals can provide you with a full checklist of the company due diligence in Estonia.
Specific aspects of company due diligence in Estonia
Besides the standard checklist, the due diligence of a company in Estonia should comprise the following specific aspects:
• Because of the continuing land reform process in the country, it should be researched if the company which is about to be purchased has suitably submitted the application to privatize a land and how far the privatization procedure has advanced;
• A lot of companies in Estonia have been previously privatized based on a privatization contract between the investors and the state. Such a contract generally includes severe reporting obligations, a business plan to be analyzed commonly for 5 to 10 years and so on;
• Due diligence is quite a new process in the country. Most of the times, the Estonian seller and the management of the company which is about to be bought might disclose a rather unreceptive and skeptical attitude when asked to disclose data and documents about the business. However, our specialists in company registration in Estonia recommend strongly to all buyers to perform such an analysis before buying a company or a property. In this way the buyers will avoid any future inconveniences.
Regardless of the type of company due diligence in Estonia that you require, please get in touch with our Estonian advisors for a customized offer.