Transaction Advisory in Singapore: A Guide for CFOs and Investors

Transaction advisory in Singapore supports foreign investors undertaking acquisitions, disposals, joint ventures, and strategic investments. Services include financial and tax due diligence, business valuation, transaction structuring, and negotiation support to assess investment opportunities, identify financial risks, and negotiate suitable transaction terms.

Transaction advisory for acquisitions, disposals, and joint ventures

Buy-side transaction advisory

Buy-side advisers help investors identify and screen acquisition targets against their investment objectives, including industry, business size, growth prospects, and strategic fit.

For investors entering Singapore, advisers may also compare the commercial implications of acquiring an established business with those of incorporating a new subsidiary.

Sell-side transaction advisory

Sell-side advisers help business owners prepare for disposal by identifying potential buyers, preparing transaction materials, and coordinating the sale process.

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Where multiple offers are received, advisers can evaluate differences in pricing, payment terms, financing conditions, and the likelihood of completion.

Joint ventures and strategic investments

For joint ventures, advisers evaluate capital contributions, funding commitments, profit-sharing arrangements, and expected investment returns.

Minority investments require consideration of dividend expectations, future capital requirements, and the financial risks associated with limited ownership or control.

How the transaction advisory process works in Singapore

The transaction process typically involves initial assessment, due diligence, valuation, structuring, negotiation, and completion. Some activities may proceed concurrently.

Transaction planning and initial assessment

An investor considering a Singapore distribution company, for instance, may examine revenue trends, operating margins, customer concentration, and working capital requirements before proceeding with further financial investigation.

For disposals, the initial assessment focuses on financial readiness, potential valuation, and factors affecting buyer interest.

Financial and tax due diligence

Financial due diligence assesses the reliability of a target company’s reported financial performance.

Advisers examine earnings quality, cash flow, working capital, debt obligations, and other financial commitments. This review may identify non-recurring income, unusual expenses, or accounting adjustments that affect normal business profitability.

For a detailed discussion, read Financial Due Diligence in Singapore: Assessing Earnings, Cash Flow and Hidden Liabilities.

Alongside the financial review, tax due diligence examines historical tax exposures, including corporate income tax filings, Goods and Services Tax (GST) compliance, withholding tax obligations, transfer pricing arrangements, and outstanding tax assessments.

Advisers may also assess whether an acquisition could affect the company’s ability to use carried-forward tax losses, as Singapore’s shareholding test can restrict their use following substantial changes in ownership.

For further details, read Tax Due Diligence for Singapore Acquisitions: Risks to Review Before Signing.

Business valuation

Business valuation assesses whether the proposed transaction price reflects the target company’s financial performance, prospects, and risks.

The discounted cash flow method estimates value using projected future cash flows, while market-based approaches compare the business with similar companies or transactions. Asset-based valuation may be appropriate where underlying assets account for a substantial portion of the company’s value.

Consider a foreign investor proposing to acquire a Singapore company at an enterprise value of S$10 million (US$7.8 million), based on reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of S$2 million (US$1.56 million) and a valuation multiple of five times EBITDA.

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Make informed transaction decisions. Our advisers can help assess financial risks and business valuations.

Financial due diligence subsequently identifies S$300,000 (US$234,000) in non-recurring income included in reported earnings. After removing this amount, normalized EBITDA falls to S$1.7 million (US$1.33 million).

Applying the same valuation multiple produces an indicative enterprise value of S$8.5 million (US$6.63 million), representing a reduction of S$1.5 million (US$1.17 million).

The final equity purchase price would also depend on net debt, working capital adjustments, and the terms negotiated between the parties.

Transaction structuring and regulatory considerations

Beyond determining the business’s value, investors must decide whether to acquire shares in an existing company or purchase selected business assets.

In a share acquisition, the acquired company retains its assets and liabilities. An asset acquisition allows the buyer to acquire specified assets and assume agreed obligations, although contractual transfers and third-party approvals may be necessary.

A share acquisition may be preferable where the buyer wants to retain the company’s existing contracts, licenses, and business relationships, although change-of-control provisions and regulatory approvals may still apply. An asset acquisition may be more suitable where the buyer intends to acquire selected operations without purchasing the entire company, subject to the transfer requirements for individual assets and contracts.

Transfers of shares in Singapore companies generally attract stamp duty of 0.2 percent of the higher of the purchase price or the value of the shares transferred. Additional conveyance duties may apply to qualifying acquisitions involving residential property-holding entities.

The proposed ownership structure may also determine which regulatory requirements apply. Singapore generally permits foreign ownership across most business activities, although certain regulated sectors impose additional requirements. Acquisitions involving entities designated under the Significant Investments Review Act may require notification or approval when specified ownership or control thresholds are reached.

Separately, transactions that could substantially lessen competition may require assessment under Singapore’s merger control framework. Although merger notification is generally voluntary, investors should evaluate potential competition concerns before completing acquisitions.

Negotiation and transaction completion

Due diligence and valuation findings inform negotiations over the purchase price and contractual terms. Where financial weaknesses are identified, buyers may seek price reductions, additional protections, or revised payment arrangements.

Purchase agreements may address working capital adjustments, net debt, financial warranties, indemnities, and contingent liabilities.

An agreement may establish a target working capital amount, with the final purchase price adjusted to reflect the amount delivered at completion.

Alternatively, the parties may adopt a locked-box mechanism, under which the purchase price is determined using an agreed historical balance sheet date, subject to protections against the seller extracting value before completion.

Transaction advisers support these financial negotiations while coordinating with legal advisers responsible for preparing the relevant agreements. At completion, they may review closing accounts, calculate purchase price adjustments, and reconcile amounts payable between the parties.

Post-acquisition financial integration and transaction support

Following an acquisition, multinational companies may need to align the Singapore entity’s accounting policies, reporting schedules, and financial controls with those of the overseas parent company.

This process can involve addressing differences in accounting standards, establishing consolidated reporting procedures, and integrating financial information into group reporting systems.

Once these reporting arrangements are established, management can monitor working capital, evaluate financial performance against acquisition forecasts, and address weaknesses in internal controls identified during the transaction.

For acquisitions involving subsidiaries across several ASEAN jurisdictions, financial integration may also require coordination between local accounting teams and regional finance functions.

Choosing a transaction advisory firm in Singapore

For acquisitions, the engagement may include a financial due diligence report identifying earnings adjustments, debt-like liabilities, and working capital exposures. A valuation report should explain the methodologies used, key assumptions, and factors supporting the proposed transaction value.

Investors should expect advisers to distinguish between findings that affect the purchase price, matters requiring contractual protection, and financial weaknesses that could justify withdrawing from the transaction.

Where the acquisition involves complex ownership structures or regulated industries, the advisory team should have access to relevant Singapore tax and regulatory expertise.

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From due diligence to deal completion, Dezan Shira & Associates supports your cross-border transactions.

For cross-border acquisitions involving subsidiaries or operations in other Southeast Asian markets, investors should also assess whether the firm can coordinate financial reviews across jurisdictions.

Before appointing an adviser, investors should agree on the engagement’s scope, deliverables, timetable, and fees, including whether the assignment covers the entire transaction or specific services such as financial due diligence or valuation.

Contact Dezan Shira & Associates for transaction advisory in Singapore

Dezan Shira & Associates provides financial, tax, and business advisory services to foreign investors and multinational companies across Asia. Contact us to discuss your transaction advisory requirements in Singapore and the wider ASEAN region.

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