Introduction

Buying an existing business can provide investors with a faster route into the South Sudanese market than establishing a new company from the ground up.

An existing business may already have customers, employees, suppliers, assets, licences, operating facilities, market relationships and a track record of commercial activity. For an investor seeking to enter South Sudan, acquiring an established business can therefore provide a potential platform for expansion and growth.

However, acquiring an existing business also means acquiring its existing obligations, risks and relationships.

A company may have outstanding tax liabilities, contractual commitments, employee obligations, regulatory issues, disputes, unclear ownership of assets or other liabilities that are not immediately visible from its financial statements.

For this reason, due diligence should be at the centre of any business acquisition in South Sudan.

South Sudan's legal framework includes the Companies Act 2012, Investment Promotion Act 2009, Taxation Act 2009, Labour Act 2017, Land Act 2009, Insolvency Act 2011, Contract Act 2008 and other sector-specific legislation.

The Ministry of Justice and Constitutional Affairs is responsible for registering companies and businesses, maintaining the register and monitoring statutory compliance, including annual returns.

Why Buy an Existing Business?

There are several reasons an investor may consider acquiring an existing company rather than establishing a new business.

Existing customer base

An established business may already have customers, contracts and recurring revenues.

Existing operations

The investor may inherit an operating team, premises, equipment, systems and suppliers.

Market knowledge

An established local company can provide knowledge of customers, suppliers, competitors and the operating environment.

Faster market entry

Acquisition may provide a quicker route to commercial operations than building a business from the beginning.

Established relationships

The target company may already have relationships with banks, suppliers, government institutions, customers and other stakeholders.

Expansion platform

An investor may use an existing company as a platform to introduce new capital, technology, management capabilities or additional products.

However, these advantages depend on the quality and legal status of the target business. An established company is not automatically a good acquisition opportunity.

What Should Investors Check Before Buying a Business?

The acquisition process should begin with due diligence, rather than negotiations around price alone.

A comprehensive review should examine the company from several perspectives.

1. Corporate and Ownership Due Diligence

The first question should be:

Who actually owns the business, and does the seller have the legal authority to sell it?

The investor should verify:

• Certificate of incorporation
• Memorandum and articles of association
• Current shareholders
• Shareholding percentages
• Directors
• Beneficial ownership
• Company registration status
• Annual returns
• Previous share transfers
• Existing shareholder agreements
• Corporate resolutions
• Charges or encumbrances over shares

This is particularly important because the Ministry of Justice's business-registration functions include maintaining company records, validating shareholder information and monitoring company compliance.

The investor should independently verify the company's records rather than relying exclusively on documents provided by the seller.

2. Financial Due Diligence

A company's reported revenue does not necessarily represent its sustainable earnings.

Financial due diligence should examine:

• Historical financial statements
• Revenue
• Gross margins
• Operating expenses
• Cash flow
• Bank accounts
• Accounts receivable
• Accounts payable
• Loans
• Outstanding liabilities
• Tax obligations
• Capital expenditure
• Related-party transactions
• Customer concentration
• Supplier concentration

The objective is to determine:

What is the business actually worth?

A company generating substantial revenue may still have limited value if its cash flow is weak, liabilities are high or revenues depend heavily on one customer.

3. Tax Due Diligence

Tax liabilities can follow the business after an acquisition, depending on the transaction structure and applicable law.

Investors should therefore review:

• Corporate tax filings
• Payroll taxes
• Withholding obligations
• VAT or applicable sales taxes
• Customs obligations
• Tax assessments
• Tax disputes
• Outstanding liabilities
• Tax incentives
• Tax exemptions
• Penalties and interest

Tax due diligence should also assess whether the company's historical filings and records are consistent with its reported financial performance.

The South Sudan legal framework includes a Taxation Act and related fiscal legislation, which should be considered alongside the specific circumstances of the target company.

4. Licences and Regulatory Compliance

Buying a company does not necessarily mean that every licence or permit automatically transfers to the new owner.

Investors should identify all licences required for the company's activities and determine:

• Whether licences are valid
• Whether they are renewable
• Whether they can be transferred
• Whether a change of ownership requires notification or approval
• Whether the company has complied with licence conditions
• Whether additional licences are required following the acquisition

This is especially important in regulated sectors such as:

• Banking and financial services
• Telecommunications
• Petroleum
• Mining
• Construction
• Healthcare
• Transportation
• Education
• Insurance
• Import and export

The Bank of South Sudan, for example, is responsible for licensing and supervising financial institutions.

5. Contracts and Customer Relationships

An acquisition can lose significant value if important contracts cannot continue after the transaction.

Investors should review:

• Customer contracts
• Supplier contracts
• Distribution agreements
• Government contracts
• Lease agreements
• Financing agreements
• Employment contracts
• Technology agreements
• Joint-venture agreements
• Agency agreements

Particular attention should be paid to change-of-control clauses.

Some contracts may require the consent of the counterparty before ownership changes.

For example:

Company A has a five-year contract with a major customer. The contract contains a change-of-control provision requiring customer approval before a transfer of ownership.

The value of the acquisition may be materially affected if that approval is uncertain.

6. Assets and Property

Investors should verify that the business actually owns or has legal rights to the assets presented as part of the transaction.

This may include:

• Land
• Buildings
• Vehicles
• Machinery
• Equipment
• Inventory
• IT systems
• Intellectual property
• Licences
• Brand names
• Trademarks

For land and property, the investor should establish the nature and validity of the company's rights and identify potential competing claims or restrictions.

7. Employees and Management

Employees are an important part of the value of an operating business.

Due diligence should review:

• Employee numbers
• Employment contracts
• Salaries
• Benefits
• Outstanding leave
• Employee disputes
• Statutory obligations
• Key management
• Expatriate employees
• Work permits
• Retention requirements

South Sudan's Investment Promotion framework provides that employees of foreign-owned enterprises are subject to applicable South Sudanese law, while also addressing employment of managers and non-managerial staff.

The buyer should also determine whether key employees are likely to remain after the transaction.

8. Legal Disputes and Liabilities

An investor should determine whether the target business has existing or potential legal disputes.

This should include:

• Court cases
• Arbitration
• Regulatory investigations
• Tax disputes
• Employee claims
• Customer disputes
• Supplier disputes
• Land disputes
• Debt claims

The review should not be limited to current litigation.

Potential liabilities should also be identified through contracts, correspondence, regulatory records and management interviews.

9. Debt and Hidden Liabilities

A company may appear profitable while carrying substantial obligations.

Investors should identify:

• Bank loans
• Supplier debt
• Tax liabilities
• Employee liabilities
• Guarantees
• Security interests
• Lease obligations
• Related-party loans
• Pending claims
• Contingent liabilities

This is one reason why financial, legal and commercial due diligence should be conducted together.

Share Purchase vs Asset Purchase

One of the most important decisions is how the acquisition should be structured.

Share Purchase

The buyer purchases shares in the existing company.

The company continues to exist as the same legal entity, but ownership changes.

Potential advantages:

• Existing business structure remains
• Existing contracts may continue
• Existing operating platform is retained

Key consideration:

The buyer may inherit historical liabilities of the company.

Asset Purchase

The buyer purchases selected assets or business operations rather than acquiring the entire company.

Potential advantages:

• Buyer may be able to select specific assets
• Certain liabilities may remain with the seller
• Transaction can potentially be structured around a defined business unit

Key consideration:

Contracts, licences, employees and other rights may require separate transfer or approval.

The appropriate structure depends on the specific transaction and should be determined with appropriate legal and tax advice.

Foreign Investors Buying Businesses in South Sudan

Foreign investors should assess the proposed acquisition against South Sudan's investment framework and the specific sector involved.

The Investment Promotion Act provides foreign investors with protections and generally permits foreign investors to own or control businesses subject to the framework and any activities reserved for nationals.

The Act also provides for the transfer of investment capital and proceeds, subject to applicable taxes and other legal obligations.

However, investors should not assume that all sectors or transactions will have identical requirements.

Sector-specific restrictions, licensing, approvals and ownership requirements should be confirmed for the particular acquisition.

How to Value an Existing Business

After completing initial due diligence, the investor can assess the value of the target.

Common valuation approaches include:

Earnings-based valuation

Based on the company's sustainable earnings or cash flow.

Asset-based valuation

Based on the value of the company's assets and liabilities.

Market comparison

Based on comparable businesses or transactions where reliable data is available.

Strategic value

An investor may also consider the value of:

• Existing customers
• Market access
• Distribution network
• Brand
• Licences
• Government or commercial relationships
• Skilled employees
• Technology
• Geographic presence

The purchase price should ultimately reflect the verified economic value of the business, rather than simply the seller's asking price.

A Practical Acquisition Due Diligence Checklist

Area	What to verify
Corporate	Ownership, directors, registration and corporate records
Financial	Revenue, profit, cash flow and liabilities
Tax	Returns, assessments, arrears and disputes
Legal	Litigation, claims and contractual obligations
Regulatory	Licences, permits and compliance
Assets	Ownership and condition of assets
Land	Title, lease and land-use rights
Contracts	Customers, suppliers and change-of-control clauses
Employees	Contracts, liabilities and key personnel
Debt	Loans, guarantees and security
Market	Customers, competitors and market position
Compliance	AML, sanctions and other applicable requirements
Transaction	Share purchase or asset purchase structure
Integration	Management, systems and post-acquisition plan

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Structuring the Transaction

Once due diligence is substantially complete, the parties can move toward transaction structuring.

A typical process may include:

Target identification
↓
Initial commercial assessment
↓
Confidentiality agreement
↓
Preliminary valuation
↓
Due diligence
↓
Transaction structure
↓
Negotiation of purchase agreement
↓
Regulatory and third-party approvals
↓
Completion
↓
Post-acquisition integration

The exact process will vary depending on the size, sector and complexity of the transaction.

Common Mistakes When Buying an Existing Business

Focusing only on revenue

High revenue does not necessarily mean high profitability or sustainable cash flow.

Accepting seller-provided information without verification

Information should be independently checked against corporate, financial, regulatory and contractual records.

Ignoring regulatory requirements

A business that operates successfully today may still have outstanding licensing or compliance issues.

Underestimating liabilities

Tax, employee, contractual and debt obligations can materially change the economics of an acquisition.

Assuming licences automatically transfer

Licensing requirements should be assessed individually.

Failing to examine ownership

Investors should establish who legally owns the business and whether the seller has authority to complete the transaction.

Negotiating price before understanding the business

A valuation should be informed by due diligence rather than based solely on the seller's expectations.

How Omnisage Can Support Business Acquisitions in South Sudan

At Omnisage, we support investors seeking to acquire, establish or expand businesses in South Sudan.

Our Corporate & Investment Advisory and Market Entry & Investment Advisory capabilities can support different stages of the acquisition process.

Target Identification

We can help investors identify potential acquisition opportunities based on:

• Sector
• Location
• Business size
• Investment objectives
• Strategic fit
• Growth potential

Commercial Due Diligence

We assess the commercial fundamentals of a target business, including:

• Market position
• Revenue model
• Customers
• Competitors
• Growth opportunities
• Business model
• Commercial risks

Legal & Regulatory Due Diligence Support

We can coordinate the review of:

• Corporate records
• Ownership
• Licences
• Contracts
• Regulatory requirements
• Tax considerations
• Employment obligations
• Potential liabilities

For specialist legal opinions, transaction documentation and legal representation, appropriate licensed legal counsel should be engaged.

Financial & Transaction Advisory

Our support can include:

• Financial assessment
• Transaction analysis
• Valuation support
• Deal structuring
• Investment modelling
• Commercial negotiation support

Partner and Stakeholder Engagement

For transactions requiring local partnerships or institutional engagement, Omnisage can support stakeholder identification and engagement.

Post-Acquisition Support

Following completion, we can also support:

• Business integration
• Strategic planning
• Operational improvement
• Regulatory compliance
• Market expansion
• Partnership development

Conclusion

Buying an existing business in South Sudan can provide investors with an established platform from which to enter or expand within the market.

However, the value of an acquisition depends on more than the company's revenue, assets or existing customer base.

The real question is what the investor is actually acquiring.

That requires a structured assessment of the company's ownership, financial position, contracts, licences, assets, employees, tax position, liabilities and market position.

For investors considering an acquisition, thorough due diligence can help identify risks, validate the investment case and provide a stronger basis for negotiating the transaction.

Omnisage supports investors through the acquisition and market-entry process, from opportunity identification and commercial due diligence to transaction structuring, regulatory assessment and post-acquisition advisory.