Business development in Lithuania


Most entrepreneurs believe that the environment for business development is currently not favorable to their company, lets agree that managing a business is not an easy task for anyone, therefore business development is even harder task. So far, there are still measures to help create and expand a business, as is the support of the European Union structural funds. Very small, small and medium enterprises account for 99% of all legal entities registered in the Republic of Lithuania. The number of enterprises with up to 49 employees in 2014 was estimated at 73 thousand. According to the opportunities offered in Lithuania, it is ranked quite good among European Union countries, but most entrepreneurs do not want to admit that Lithuania is friendly to small businesses. An important aspect of business is the idea of ​​a business, who has a great idea, he will easily  attract both external financing and successful business expansion. Most entrepreneurs still do not agree on what is more difficult, to start a business or to expand it? Some argue that starting a business is a much more difficult matter because it requires investment, market research, work experience, customer satisfaction, and the other side says that starting a business is only a matter of money, but developing a company into a large, well-functioning, competitive company is a big challenge.

If you still decide that time for your company has come to expand and you want to take action on this, but if you are wondering what exactly to start with, what legal regulation of this whole process or just want to consult on one or the other question, we invite you to contact us and our experienced staff will be happy to answer your questions.

  • INVEST IN LITHUANIA
  • BUSINESS PLAN ARRANGEMENTS
  • BUSINESS SALE – PURCHASE
  • BUSINESS INTEGRATIONS
  • STRUCTURING TRANSACTIONS
  • HOLDING COMPANIES
INVEST IN LITHUANIA

Having a business in Lithuania doesn’t necessary mean to own and run a business by your own. It is possible to invest in Lithuania and earn profits without running a business by your self. There are many potential small companies looking for investment to expand and develop their business. You can become a part shareholder of such company and enjoy your investment by tracking it financial reports. Like everywhere there are risks involved as well. The more promising investment it looks, the more risky it will be! Don’t get afraid of it. Our company can asses the possible risk and advice you which investment option is the best at the given moment in Lithuania. We have a database where we make records about companies and projects searching for funding and potential investors looking for investment opportunities in Lithuania.

Options to invest in Lithuania
Most common investment projects are real estate. Buying a land, building living apartments, office zones or supermarkets. Such projects gives a good return rate, but requires big amounts and time to be invested upfront. Many of retails or wholesale distributors are lacking of cash flow in their company balance sheets, so it might be a good chance to borrow some money for a short period with a good interest rates to get fast profit returns. If you are willing to invest in Lithuania, you should be aware of potential risks related with local market aspects and politics. Always consult with us about your intended investments and never leave any questions not answered before making the final decision. We have helped many persons to invest their capital in Lithuania and we would be happy to share our expertise with you.

BUSINESS PLAN ARRANGEMENTS

Business plan is an integral part of business, business development, business integration, search process for funding sources. Business plan is a document that sets out clearly and convincingly what the company wants and how it intends to implement its goals. This user-friendly tool is designed to familiarize with the business idea of a potential investors. Business plan is a complex task.

When preparing a business plan, it is important to consider many different aspects of and systematically examine them in a logical sequence. When beginning to arrange the business plan and fixing the first ideas, everything should be planned thoroughly at once. A properly prepared business plan can convince potential investors and creditors that the described activity is justified and long-term economic success can be expected. A business plan forces to think on the business idea, reveal gaps in knowledge, potential barriers in the future allowing checking the viability of the idea.
We help our clients to develop business plans by providing a clear, understandable and appropriate form and we offer the following services:

  • Clear expression and purification of business ideas, setting the correct goal and business development strategy;
  • Description of company’s products / services, manufacturing, delivery methods;
  • Description and systematization of company management, leadership, organization of work;
  • Market research implementation assessing demand, consumer needs, competitors;
  • Estimation of micro-and macro-environmental factors taking into account specific business critical sector and its prospects;
  • PEST and SWOT analysis;
  • Marketing plan development;
  • Sales volume forecasts, budgeting;
  • Calculation of basic profitability and payback, other financial indicators, cash flow modeling;
  • Preparation of a long-term financial plan that allows you to regularly monitor the financial condition and identify deviations preparation.
BUSINESS SALE – PURCHASE

Once decided not to launch a new business, but to take over an existing one, the choice of appropriate acquisition technique depends on many factors that cannot be predicted and assessed at once. Even in case of having all necessary information, it can be difficult and time taking to choose the best legal way of business transfer for both parties to the transaction. Most often this relates to tax, liability of the buyer and seller and certain other matters.
In addition to the purchase and sale of the company and share purchase agreements, there are several legal ways to buy a business: execution of several separate contracts on sale of property rights, actual acquisition of the company by reorganizing the legal person.

In the early stages of the negotiations upon the decision of the way business sale and if share purchase is selected, the buyer’s right to carry out inspections and procedures thereof may be determined by executing a preliminary sales contract. In case of a company sale and purchase, it is not recommended to execute a preliminary agreement before inspection is completed, because the preliminary contract would require determining the future of one of the essential conditions of the contract – the company price. Therefore, if the way of business sale is not selected or if the company sales agreement is selected, the right to implement inspection should be provided for in a document on negotiations results – the letter of intent.

The seller usually enables the purchaser to carry out an inspection of the company. Checks can be varied, but in most cases it is useful for the purchaser to carry out legal, financial and tax inspection.
When inspecting a company, it is sought to determine the value of the business. There are several inspection alternatives. As mentioned above, the seller submitting some information about the company may confirm that the information is correct (if the purchaser who signed the contract establishes that the information was incorrect the seller must reimburse the buyer for the loss or pay a penalty if such penalty is provided for in the contract). Also, the parties may agree that payment of the whole amount or a part thereof be deferred (in such case the buyer acquires the company, checks it, and if it establishes certain problems due to which the price should be lower, he can not to pay the rest amount, however it is important that the parties would be expressly agreed on when they can reduce the price).

In some cases when after the transfer of the company or a part thereof, supply or distribution channels that were used by the company who sold the business, are closed. It is also often happens that the intellectual and industrial property rights used by the sold company remain in possession of the seller. In this context, the parties in addition to the contract on company sale may sign additional agreements, such as the on long-term supply of goods or services, rental, distribution or franchise agreements. Additional agreements along with the company purchase and sale agreement, in principle, are not necessary, but conclusion of them are justified by economic considerations and legitimate desire of the buyer for the business to operate not worse than before the acquisition.

BUSINESS INTEGRATIONS

When expanding business, entrepreneurs often have to deal with issues on business integration (mergers, acquisitions etc.). Due to general business globalization trends today, a significant increase in merger and acquisition transactions can be noticed. Because of complexity and volume of such transactions professional help is often needed. Professionals help companies and individual clients to successfully complete mergers and acquisitions as well as corporate buying and selling. Our global experience and expertise, provides clients with clear, objective, and practical advice on transactions from its beginning to its successful outcome.

Therefore, we offer our clients the following business integration services:

  • Customer needs analysis;
  • Search for a business to purchase or sell;
  • Search for potential business buyers or sellers;
  • Planning of acquisitions, takeovers, mergers and sales;
  • Business assessment;
  • Analysis of funding opportunities and optimization of funding schemes;
  • Consultation on specific issues of taxation and transaction structuring;
  • Consultation, depending on the jurisdiction in which the transaction takes place.
STRUCTURING TRANSACTIONS

When companies seek to expand their business, sell their business, or buy a new business, or form an important deal for cooperation, they often do not know how to do it best with the lowest possible legal, tax or financial risk, or with minimal risk of future litigation. Therefore, we offer our clients services of transaction structuring. Transaction structuring process means a legal, fiscal and financial analysis of the situation when determining future guidance and choosing the most appropriate method and scheme of implementing the transaction. The customer will receive a reasoned opinion on the underlying problems of the transaction subject matter, as well as suggestions to solve the problems; each of the proposals is considered and negotiated carefully; ultimately, the optimal solution is selected. Transactions structuring can be of three types: legal transaction structuring, tax transaction structuring and financial transaction structuring. Transaction structuring is a long and complicated process; every step of structuring requires special knowledge and skills, therefore, only professionals can implement it properly.

Legal Transaction Structuring

  • Examination of the transaction from legal perspective according to the current legislation, international agreements, etc.
  • Arrangement of a detailed plan of legal actions;
  • Assistance in execution of the transaction documents pursuant to valid legal acts and in performing other necessary legal actions;
  • Transaction security.

Tax Transaction Structuring

  • Examination of the transaction from tax perspective according to the current legislation, international agreements, etc.;
  • Creation and analysis of transaction tax models, selection of the optimal model;
  • Advice on tax issues depending on the jurisdiction in which the transaction takes place;
  • Advice on tax issues in mergers, acquisitions, liquidation of companies.

Financial Transaction Structuring

  • Examination of the transaction from financial perspective according to the current legislation, international agreements, etc;
  • Analysis of opportunities for financing, optimization of funding schemes;
  • Analysis of assets and debt structure acquired as a result of the transaction;
  • Analysis of payments size, structure, schedule;
  • Advice on only special financial arrangements between parties.
HOLDING COMPANIES

A holding company is a system of commercial organizations having a managing company managing control shares package or pays of its subsidiaries and subsidiaries. The managing company may have other functions. A subsidiary is a company the majority of the voting rights of which is held by another company or if another company directly or indirectly exercises a dominant influence on it.

Holding companies are emerging globally because of widely spread integration processes. Why the companies join to holdings? The holding is created for a specific purpose – the conquest of new markets and / or reducing costs. Both of these factors increase the value of the company; in order to achieve this objective, it is required the entire system and not only managing company, to work efficiently.
It should be noted that the value of the holding shares grows in case the whole system works effectively (the management of the company and its subsidiaries).

Recently, due to the integration of business and globalization processes mergers and acquisitions are becoming increasingly popular. The companies are established in different countries and combined into groups. In order the whole holding system to work effectively and to ensure the effective tax planning, it is important to choose the right place for registration of the holding company as well as for its subsidiaries in the place of registration and to establish the principles of work between them. The correct choice of jurisdiction for each company and of their legal form as well as adjustment of the entire system to the specifics of particular business makes it possible to reduce the tax burden.

Taking into account the needs of our clients, we provide the following services:

  • Advice on place of registration of a holding company;
  • Advice on place of registration of subsidiaries;
  • Advice on legal form of non-resident companies and their management specifics;
  • Accounting for non-resident companies, legalization of documents;
  • Appointment of management bodies of non-resident companies;
  • Review of documents and legal support of non-resident companies (obtaining and renewal of Good Standing Certificates and other necessary documents);
  • Advice on international taxation;
  • Advice on tax optimization.
Business development in Lithuania
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