Some essays, some thoughts
Buying a Company
The 1989 Chinese New Year was celebrated somewhat differently from the previous ones. The year of the snake was a year of hard work and new adventure, I thought, for at 8 am on the fourth day of the New Year, my New Year visit was a factory at Bintawa Industrial Estate. The purpose? To take stock of the what we had bought before the CYN a paint factory that went under and was no more liquid.
Negotiations had been going on for a while before the Chinese New Year, the owners were desperate to get rid of the company that they had set up few years earlier. It ran into financial difficulties and the guarantors were about to meet the lender at the court. By closing the deal, we would settle the loans and other outstanding liabilities, the company and factory would be ours. It would have a new life and a new start, like the new year.
My part in the exercise was to arrange for the finances needed for the purchase. This was part of my daily works and should not post any difficulty, I was sure. My only difficulty was to decide which banker to approach. My style was not to offer a deal to more than one financier. I would approach a selected banker for a preliminary assessment, if the bank was interested on the deal, we would submit our proposal, if not I would approach another banker. My understanding with our bankers is quite straight forward and simple if they are unable to do the business for whatever reasons, do not let us wait for too long, other bankers are always interested. The rationale is like this, we know what we want and we know our bankers rather well. We expect the best offer from them for our proposal. It would be painful to our friends at the banks if I have to reject all the offers except one, after all we only need one financier for that particular purpose. On these premises, I always approach only one banker at a time for a specific requirement, but I expect early indication from the bank.
Hello, may I speak to Mr.ˇK" I called KL, the Corporate Banking Department, explaining our scheme. We have this idea of buying a factory in KuchingˇK is your bank interested?
Well, give me 2-3 days and I will call you. Came the reply.
Were very keen, please submit through our Kuching Office. Was the good news after 2 days. This, to my understanding with my banker, meant approval and utilization of the facilities within one month. Equipped with this confidence, we negotiated and finalized the purchase agreement with some fine tunings.
Why did we buy a paint factory? There were a few main reasons. Firstly, we have been selling paints for many years, this is a business we are very acquainted. After selling a product we believed in for more than 20 years, it was only natural that we become a manufacturer of the product. Secondly, Yung Kong already had a very good and wide distribution net work throughout Sarawak, we therefore did not foresee any major problem in marketing another of our own products. Last but not least, we have a tin-can manufacturing factory that can make and supply the containers for the paint, thus complementing our business. This is another opportunity for us to apply our principle of Earn from our own business a business philosophy that never failed to work to our advantage.
The existing bankers of the factory requested us to take-over and continue the loan. We thought otherwise. It was better to pour away the sour milk and get a cup of fresh milk than to pour more fresh milk into half a cup of sour milk! Life will continue on, but not with the ghosts of bad management haunting you every day. Life can be started again, with new management, vision and as part of Yung Kong Group, a brand new life is awaiting the company we bought.
Tomorrow will bear fruits if we toil hard today.
- Ir Michael Hii, 1996
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