ECOVIS Focus Hong Kong

Ecovis is now offering legal services in Ireland

In addition to our existing partners of ECOVIS DCA we welcome our new partners from O’Connor Solicitors – Member of ECOVIS International headquartered in Dublin.

Established in 1994 (out of the practice J.G. O’Connor & Co), O’Connor Solicitors – Member of ECOVIS International is a midsized firm with a focus in commercial and administrative law, employment, commercial property, regulation, and commercial litigation. In August 2019, the firm merged with Peter Morrissey and Company Solicitors, an established commercial property practise based in Dublin. Currently the four equity partners George O’Connor, Ruth O’Connor, John O’Connor and Peter Benson lead a team of 12.

We warmly welcome our new colleagues from Dublin to the Ecovis family!

Representative Office Thailand: Along with Regional Office or Branch an Alternative for Expansion in Thailand

A limited company is one of the most common solutions for international companies looking to expand their business activities into Thailand. However, there are alternatives that offer advantages.

Representative Office & Regional Office

A representative office (“rep-office”) or a regional office are suitable options for international companies who simply wish to obtain a juristic person number from the Thai authorities. With this number it is not necessary to set up a separate company or apply for a Foreign Business License (FBL). However, companies must set up physical offices to carry out any legally permitted activities not related to income.

Representative Office activities not related to income:

1. Sourcing of goods or services in Thailand for the head office
2. Checking and controlling the quality and quantity of the goods purchased or hired by the head office for manufacture in Thailand
3. Giving advice concerning goods from the head office sold to agents or consumers
4. Propagation of information concerning new goods or services from the head office
5. Reporting to the head office on business trends in Thailand

Regional office activities not related to income:

1. Communicating, coordinating and directing, on behalf of the head office, the operation of branches and affiliates that are located in the region
2. Consulting and management in training and human resources development
3. Providing financial management services
4. Marketing control and sales promotion planning
5. Product development
6. Services in research and development

A rep-office or a regional office may not generate any income except for the financial support from its head office – which shall not be subject to corporate income tax – or receive any purchase orders, make sales or negotiate business with any third party. The minimum capital required to register a rep-office or a regional office is THB 2 million (approx. USD 62,092), which must be brought/transferred to their Thai bank account within 3 years as follows:

• The first 25% of the required registered capital is to be paid within the first 3 months of operation
• The second 25% is to be paid within the first year of operation
• The third 25% is to be paid within the second year of operation
• The remainder is to be paid within the third year of operation

Do you want to expand your business to Thailand? Together we will help you find the best company form for your business.

Bunnasomboon (Aaron) Chaiparinya, Partner, JTJB International Lawyers Co., Ltd. – Member of ECOVIS International, Bangkok, Thailand

Branch Office

Although a rep-office or a regional office would be seen as a branch office in some countries, in Thailand, subject to the FBL, a branch office can obtain a juristic person number and perform any “income-related activity” in Thailand on behalf of its head office.

The required minimum capital for a branch office is minimum THB 3 million (or more depending on the FBL requirements). The registration process for a branch office could be significantly longer than for a rep-office or regional office, depending on the type of business activity, explain the advisers from JTJB International Lawyers Co., Ltd. – Member of ECOVIS International.

For further information please contact:

Bunnasomboon (Aaron) Chaiparinya, Partner, JTJB International Lawyers Co., Ltd. – Member of ECOVIS International, Bangkok, Thailand
Email: aaron@jtjb.com

Yukgrit Kantamanee, Associate, JTJB International Lawyers Co., Ltd. – Member of ECOVIS International, Bangkok, Thailand
Email: yukgrit.k@jtjb.com

EBITDA-Multiples: The Easy Way to Determine Enterprise Values?

The most common way to determine an enterprise value is to use a multiple of the EBITDA. When a deal is closed, both parties know the enterprise value and the EBITDA. Determining this multiple seems like a simple exercise and in many countries they are published in trade magazines. How useful are these figures?

A simple international comparison

In Germany, the ‘Finance Magazin’ website publishes market multiples and in the Netherlands, ‘Brookz’ offers the same kind of information. When comparing these two sources, it could be concluded that the average software company in Germany has a 30% higher enterprise value than its Dutch competitor. Is this comparison fair?

Do all M&A-advisers use the same conditions?

Tools like these should never be used without the proper expertise and disclaimers. The first consideration is the quality of the sources. In both cases a variety of M&A specialists deliver their multiples realised in recent transactions. But not all the sources use the same methods. Which EBITDA is used?

• Last fiscal year?
• Last twelve months?
• Running forecast or an average of several years?
• And how do they deal with, for instance, on-balance real estate? This has a major influence on the EBITDA.

Then there is the discussion around defining the industry. One adviser might consider Amazon a retail company and another would qualify them as an IT company. The impact? The market multiple for IT is twice as high as for retail. This lack of clear definitions and control makes the final averages “wobbly” to say the least, explain the experts from Ecovis cooperation partner Taurus Corporate Finance.

A correct enterprise valuation must always be created individually. We can support you with this.

Mark Eenink, Managing Director, Taurus Corporate Finance*, Deventer, Netherlands

Expectations

According to Taurus Corporate Finance, one of the most important issues for M&A advisers is to manage expectations. An M&A process needs to be properly managed. But when shareholders have unreal price expectations, they may take some convincing before the start of the process.

Craftsmanship

A good business valuation requires thorough research and customisation. Without exception. Averages may be useful, but only with proper use and in comparison to other methods. A certified business valuator creates a variety of valuations and determines ranges.

A comparison for the housing market is easily made. There is always an average for the prices of detached houses in a certain region, but only a real estate adviser who does many transactions is able to make a fair comparison to other propositions in the market. That is his profession. It is the same with a business valuation. What is needed is a rock-solid, substantiated valuation tailored to a specific situation. An EBITDA-multiple is a first indication.

For further information please contact:

Mark Eenink, Managing Director, Taurus Corporate Finance*, Deventer, Netherlands
Email: m.eenink@taurus.nl

*ECOVIS International cooperates with Taurus Corporate Finance, a Netherlands based Corporate Finance firm with office in Deventer.