Many potential investors who will work with local partners in Indonesia, do not know when they will establish a company through investments provided from Venture Capital. Weaknesses of local partners as citizens of Indonesia, can not explain to investors, "how to start investments that will be made through Venture Capital financial transactions to Indonesia". This paper will explain how to start a business in Indonesia using Venture Capital, and can be used for all investment projects, JV (Join Venture) or JO (Join Operation).

1. STRATEGY IMPLEMENTATION NEW PROJECT
COCONUT INDUSTRY
1. ESTABLISH BUSINESS ENTITIES IN INDONESIA
1.1. Legal Preparation
***Key point establishing business entities in Indonesia is a local partner who will
responsible on administration to take care the government regulation. He’ll collaboration
with the public notary (also the legal adviser on the government bodies) and financial
adviser (public accountant to prepare all standard financial report approved by the Ministry
of Finance and Taxes).
Key point requirement as follows:
a. Shareholder agreement between foreign partner and local partner;
b. International passport of foreign partner;
The general procedures for Setting up a Foreign Investment Company (PT PMA) in
Indonesia take care by the local partner, public notary and financial adviser.
The detail general procedures as follow:
You need to turn to the Indonesia Investment Coordinating Board (BKPM), which is the
investment service agency of the Indonesian government and deals with foreign
investment. Although the BKPM has recently improved its services, it can still be a
hazardous undertaking for a foreigner (especially one who is new to Indonesia and is yet to
learn the language and customs) to arrange all permits in a timely and smoothly manner. To
avoid problems, most foreign investors prefer to use the services of a local company, one
that is specialized in the setting up of a PT PMA or representative office, to deal with all
procedures at the BKPM and other institutions (the foreign investor only needs to send all
necessary documents to this local company). There are many local Indonesian companies
that offer a “company establishment package” to foreign investors. Depending on sector,
costs for the establishment of a PT PMA can vary and requires about ten weeks to be
completed. Indonesia Investments also offers these services (contact us here for further
information).
Generally, the following licenses/documents are required for the establishment of a PT
PMA in Indonesia:

2. Stages Time Estimated
(days)
1. Principle License & Business License from BKPM
2. Deed of Establishment (containing the Articles of
Association) legalized by a Public Notary
3. Legalization of the legal entity status of the PT PMA by the
Ministry of Law and Human Rights
4. Domicile Letter from the local district authority
5. Tax Identification Number (NPWP) and taxable
entrepreneur confirmation (PKP) from the tax office
6. Company Registration Certificate (TDP) from the agency
for integrated licensing services (BPPT)
7. Manpower Report and Company Welfare Report from the
sub-department of the Ministry of Manpower
7
1 to 2
10
3
3
14
7
Shareholders of the PT PMA
At least two shareholders are required (President Director and President Commissioner) for
the establishment of a PT PMA. At least one of the shareholders needs to be a foreign
individual (or foreign legal entity). ***The Director needs to reside in Indonesia to take
care of all daily activities. The foreigner who works and resides in Indonesia is required to
obtain a tax number (NPWP) and a work permit (KITAS).
Deed of Establishment of the PT PMA
In order to set up a PT PMA in Indonesia, the shareholders must present a deed of
establishment which needs to be legalized by a public notary. The deed of establishment
contains, besides the Articles of Association, the following additional information:
1. Regarding the Founders:
a. In case the shareholder is an individual, the name, date of birth, place of birth,
current residence information and citizenship.
b. In case the shareholder is a legal entity, the domicile of the legal entity, including
the full address, the date and number of legalization of the ministry.
2. Regarding Board of Directors and Board of Commissioners:
a. The name, date of birth, place of birth, current residence information and
citizenship information of the members of Board of Directors and Board of
Commissioners who are first appointed through the deed of establishment

3. 3. Regarding the Shareholders (other than the founders):
a. The names, the number of shares and their issued and paid up nominal value.
Paid Up Capital
For the establishment of a PT PMA, the foreign investor needs to comply with minimum
capital requirements for foreign investment. Currently the minimum requirement stands at
value in US$. 50,000,000 (fifty million).
1.2. Preparation For Running A Business
1. Determine the organizational structure that will function to carry out the work making
commitments to:
a. Acquisition of land and buildings as offices to carry out administrative activities
b. Land and building acquisition as a coconut processing production activity
c. Procurement of equipment
 Industrial production and operational equipment
 Office equipment that will be needed
d. Building cooperation with coconut suppliers
e. Building cooperation with buyers of the initial production of coconut raw materials
2. Recruiting the Human Resources to provide early operation and production
a. Finance Manager
A Finance Manager distributes the financial resources of a company, is responsible
for the budget planning, and supports the executive management team by offering
insights and financial advice that will allow them to make the best business
decisions for the company.
Finance Manager duties and responsibilities of the job
As a crucial member of the finance team, a typical Finance Manager job description
should include, but not be limited to:
 Collecting, interpreting and reviewing financial information
 Predicting future financial trends
 Reporting to management and stakeholders, and providing advice how the
company and future business decisions might be impacted
 Producing financial reports related to budgets, account payables, account
receivables, expenses etc.
 Developing long-term business plans based on these reports
 Reviewing, monitoring and managing budgets
 Developing strategies that work to minimise financial risk
 Analysing market trends and competitors

4. Finance Manager job qualifications and requirements
A degree and several years’ experience in the financial field will be required to gain
a Finance Manager role. A degree in the following fields will prove particularly
advantageous:
 Accountancy or Finance
 Economics
 Mathematics
 Business Studies
 Management
As well as formal qualifications, a Finance Manager job description should detail
the following qualities:
 An analytical mind
 Negotiation skills and the ability to develop strong working relationships
 Commercial and business awareness
 Good communication skills – both written and verbal
 A keen eye for detail and desire to probe further into data
 Ability to stick to time constraints
b. Technical Manager
Technical managers are integral to the overall development and success of their
workplaces to managing equipment installation and upgrades, technical managers
create and maintain an organization's internal and external sites.
Duties
 Deep understanding of manufacturing methods used for small and big
components
 Ability to choose the best manufacturing processes which achieves highest
quality at the lowest cost components
 Ability to perform and interpret cost modeling activities to provide technical
information for effective negotiation
 Ability to write request for quotes, analyze results and make informed
recommendations on best practice for manufacturing Plan process development
and execute clear requirement setting expectations to selected Suppliers, Project
Management skills to conduct review, supplier review etc.
 Interface with Suppliers directly to ensure design requirements and process
capability is achieved
 Ability to execute for process characterizations manufacturing development
 Support Fixture Development and validation activities:

5.  To execute the product launch by collaborating with various teams for
tracking production, planning and revenue projections and tracking
 To deliver for the successful launch of the prototype including
conceptualization, functional specifications, release plan and product
roadmap
 To enable Opportunities identification either by sourcing them directly from
the customer or by proactively understanding their needs
 To jointly perform various activities to determine the financial and
commercial viability of the product
 To manage, guide and develop the team
 Generate ideas for improving technical products
Technical Manager Requirements
A graduate degree is preferable, most technical managers need only a bachelor's
degree in a field based in mechanical and engineering technology
c. Operation Manager
Manage overall operations and is responsible for the effective and successful
management of labor, productivity, quality control and safety measures as
established and set for the Operations Department. Ensure safe and efficient
operations. Serve as a company representative on regulatory issues. Enhance the
operational procedure, systems and principles in the areas of information flow and
management, business processes, enhanced management reporting and looks for
opportunities to expand systems. Carry out supervisory responsibilities in
accordance with company's policies and applicable laws.
Responsibilities may include interviewing, selection and hiring; training new and
existing employees; planning, assigning and directing work; authoring and
discussing with employees performance appraisals; addressing employee
performance and corrective action plans; employee motivation and rewards.
Requires a bachelor's degree in area of specialty and 8-10 years of experience in the
field or in a related area. Familiar with a variety of the field's concepts, practices
and procedures. Rely on extensive experience and judgment to plan and accomplish
goals. Perform a variety of tasks. Lead and direct the work of others. A wide degree
of creativity and latitude is expected.
Responsibilities:
 Recruit, select, train, assign, schedule, coach, counsel and discipline employees
 Communicate job expectations; planning, monitoring, appraising and reviewing
job contributions
 Plan and review compensation actions; enforcing policies and procedures

6.  Contribute operations information and recommendations to strategic plans and
reviews; prepare and complete action plans; implement production,
productivity, quality and customer-service standards; resolve problems;
complete audits; identify trends
 Forecast requirements; prepare an annual budget; schedule expenditures;
analyze variances; initiating corrective actions
 Develop operations systems by determining product handling and storage
requirements; develop, implement, enforce and evaluate policies and
procedures; develop processes for receiving product, equipment utilization,
inventory management and shipping
 Analyze process workflow, employee and space requirements and equipment
layout; implement changes
 Maintain safe and healthy work environment by establishing, following and
enforcing standards and procedures; complying with legal regulations
 Update job knowledge by participating in educational opportunities; reading
professional publications; maintaining personal networks; participating in
professional organizations
 Accomplish operations and organization mission by completing related results
as needed
 Meet or exceed operations labor budget expectations
 Manage staff levels, wages, hours, contract labor to revenues
 Responsible for all department managers and supervisors, with review/approval
responsibility for all operations employees
 Run a safe, injury/accident free workplace
 Responsible for all aspects of vehicle and heavy equipment rentals
 Establish contracts and pricing and ensuring proper maintenance and serving as
primary liaison with utilities and local government agencies, such as fire,
police, health and safety agencies
 Manage relationships with key operations vendors
 Track vendor pricing, rebates and service levels
 Review and approve all operational invoices and ensure they are submitted for
payment
 Serve as primary point of contact when there are customer issues related to
equipment quality, customer service, or accidents and mishaps on-site. In
particular, this includes any issues on-site at client facilities, such as breaking a
fence or tape residue on flooring
 Communicate customer issues with operations team and devise ways of
improving the customer experience, including resolving problems and
complaints
 Work closely with GM and management team to set and/or implement policies,
procedures and systems and to follow through with implementation.
 Communicate all operating policies and/or issues at department meetings
 Work closely with the inventory manager and team to perform analysis of our
inventory and ensure we are utilizing our inventory effectively, purchasing the
right equipment, maintaining solid inventory data and reduce sub-rental
expenses
 Communicate with legal counsel and safety department to ensure all processes
remain compliant governmental regulations

7. d. Purchasing Manager
Manage all aspects of purchasing to efficiently and cost-effectively support
organizational operations.
Job Tasks, Duties and Responsibilities
 establish and implement purchasing policies, procedures and best practices
 monitor ongoing compliance with purchasing policies and procedures
 direct procurement policies to ensure all items are purchased and delivered
within budget and time constraints
 identify and source new suppliers and vendors
 manage vendor and supplier selection process based on price, quality, support,
capacity and reliability
 develop and maintain strategic relationships with key suppliers and vendors
 establish and update an approved vendor/supplier database
 develop, negotiate and administer purchasing agreements and contracts with
suppliers in support of organizational requirements
 evaluate contracts to ensure compliance with legal requirements and
organizational policies
 monitor supplier and vendor compliance with contractual agreements
 measure and manage the vendor and supplier cost, quality and delivery
performance
 oversee supplier compliance with internal quality standards and external
regulations
 troubleshoot cost, quality and delivery concerns
 manage risk relating to quality, cost, delivery and supply of purchases
 introduce performance improvement measures for suppliers and vendors
 work with relevant departments to manage inventory requirements
 facilitate timely placement of purchase orders
 review purchase orders for proper authorization and compliance with
organizational policy and procedures
 develop and manage purchasing budgets and forecasts
 monitor and reduce purchase variances to meet profit objectives
 produce regular reports on purchase commitments, costs and delivery
performance
 oversee the operations and daily activities of the purchasing department
 performance manage, develop and motivate purchasing staff
 direct continuous improvement of purchasing processes in line with changing
organizational needs and market conditions

8. Education and Experience
 college degree in business, materials management, operations management,
engineering or related field
 experience in purchasing and procurement
 supervisory experience
 working knowledge of project management principles and practices
 working knowledge of all laws and regulations relating to procurement and
contracts
 knowledge of purchasing and supply chain systems, LEAN principles of
planning and MRP/ERP systems often required
 financial acumen
 high competency level in MS Office applications
Key Skills and Competencies
 communication skills
 negotiating skills
 networking skills
 planning and organizational skills
 analytical skills
 problem-solving
e. Sales and Marketing Manager
A Sales and Marketing Manager is responsible for researching and developing
marketing opportunities and planning and implementing new sales plans. The Sales
and Marketing Manager will also manage both the marketing and the sales staff and
will perform managerial duties to meet the company's operations goals.
He assists in the advertising and selling of our company's products and to create
competitive advantages for our company in the market industry. The Sales and
Marketing Manager's responsibilities include generating unique sales plans,
creating engaging advertisements, emails, and promotional literature, developing
pricing strategies, and meeting marketing and sales human resource objectives. The
Sales and Marketing Manager represents the company's brand and drives strategies
to increase product awareness by observing the market, competitors, and industry
trends.
Sales and Marketing Manager Responsibilities:
 Promoting the company's existing brands and introducing new products to the
market.
 Analyzing budgets, preparing annual budget plans, scheduling expenditures,
and ensuring that the sales team meets their quotas and goals.
 Researching and developing marketing opportunities and plans, understanding
consumer requirements, identifying market trends, and suggesting system
improvements to achieve the company's marketing goals.

9.  Gathering, investigating, and summarizing market data and trends to draft
reports.
 Implementing new sales plans and advertising.
 Recruiting, training, scheduling, coaching, and managing marketing and sales
teams to meet sales and marketing human resource objectives.
 Maintaining relationships with important clients by making regular visits,
understanding their needs, and anticipating new marketing opportunities.
 Staying current in the industry by attending educational opportunities,
conferences, and workshops, reading publications, and maintaining personal
and professional networks.
Sales and Marketing Manager Requirements:
 A Bachelor's degree in Marketing, Mathematics, Business Administration, or
related field.
 3-5 years' experience in marketing or sales.
 Experience in management may be advantageous.
 Understanding and knowledge of sales and marketing.
 Strong analytical, organizational, and creative thinking skills.
 Excellent communication, interpersonal, and customer service skills.
 Knowledge of data analysis and report writing.
 The ability to understand and follow company policies and procedures.
 The ability to work under pressure.
2. RUNNING THE BUSINESS IN EARLY
Establish and determine a work schedule that is integrated with:
2.1. Human resources acquisition to be employed
2.2. Procurement of production equipment to be used
2.3. Procurement of coconut needs that will be used as raw materials
2.4. Marketing and selling of processed products from coconuts
2.5. Building a waste treatment system plant to managing the waste coconut production process
Production results from processed coconut will be carried out in stages:
First Stage
2.6. Production of coconut into powder and sold to customers, especially industries that will
need as raw material for VCO or coconut milk
2.7. Waste generated from coconut production, namely shells, fibers, brown skin and water, is
separated from sales as follows:
a. Coconut water is sold to industries that produce health drinks
b. The shell is sold to industries that will produce charcoal energy
c. Fibers are sold to industries that produce household appliances (brooms, brushes,
doormats)

10. Second Stage
Improve and develop the function of production equipment by adding equipment to be used, so
that the production of coconut from powder becomes
a. VCO (Virgin Coconut Oil)
b. Coconut milk
For waste material
a. Fibers, by building a system and procuring equipment for hardening the fibers into material
that will be used as an aircraft wall in the interior
b. For charcoal, by building systems and supplying equipment to become charcoal energy
c. For brown skin and liquid waste, by building system and procuring equipment for processing
the brown skin and liquid that will be used as organics fertilizer and material agriculture
Third Phase of Agricultural Land Acquisition
a. Acquiring land that already has a coconut tree, which will be used to coconut supply to the
industry that has been built.
b. Implements new technologies for agriculture on coconut plants, so that coconut procurement
is not disrupted due to weather changes and reduces production costs for procuring coconuts.
3. EXIT STRATEGY TO ACCELERATE RETURN OF INVESTMENT
What I told you that I know how to shortcut the payback period on a typical project and portfolio
management (PPM) maturity initiative? What if I could tell you how to abbreviate the growing
pains and go straight to the results?
Getting to a solid return on investment on your PPM investment takes a while. Take it from me
to following a few simple principles.
The first principle is to truly understand how PPM can provide value within the organization.
Once we understand the real value proposition, we can make a beeline for that goal… knock it
out of the park, and then turn around to focus on the less critical things. Think of PPM maturity
similar to how I played Capture the Flag with my kids at a paintball park recently. When the
referee kicks it off with the whistle, you sprint to the back of the compound, grab the opponents’
flag, and then turn around to begin mopping up the remnants of their force.
So what’s the underlying goal in any PPM maturity exercise? Resource metrics? Operational
excellence? Risk avoidance? Predictability?
No, I would argue all of these are secondary goals. They’re necessary at some point, but not
sufficient. No, the main goal of a PPM maturity undertaking is almost always to align project
execution with the strategy of the company period.

11. The challenge is that many times these endeavors are chartered at the wrong level, for example,
as an investment in project delivery by the PMO organization. When that’s the case, the journey
takes on the characteristic of a salmon swimming upstream. We have to start at the bottom and
keep working our way upwards until we can get to the point where the project portfolio may be
aligned with the fundamental needs of the organization. This approach may be ostensibly risk
averse, but it greatly slows the realization of the ROI on the PPM initiative.
So how do we address this principle? Start at the top. Imagine that you’re starting with a white
sheet of paper. Understanding the organization and its goals as you do, how do you design the
perfect mechanism to execute on strategy? That becomes the end goal of the PPM maturity
exercise, to build the processes, tools and behavior required to support the execution of
organizational goals. Don’t stop there, however. If you start at the top and never take it down to
the execution layer, you end up with some fantastic reports and slide decks — depicting a fantasy
world that will never get realized. Start at the top and follow through all the way down to the
project execution processes.
The second principle is to truly understand the importance of change management as an enabler
of PPM maturity ROI. Without the behavioral change, nothing happens. How do we get that
behavioral change? There are a number of ways and frameworks to accomplish this, but the main
way I’ve seen to succeed in this space is to focus on inclusive involvement and a solid consensus
as to the underlying goals of the initiative. This means allowing the folks at the execution end of
the portfolio to participate in discussions on how the portfolio links back to organizational goals.
Change management in PPM maturity endeavors is most often subverted by two things:
1. An overriding focus on the technology required to enable PPM processes; and/or
2. The cognitive dissonance caused by acknowledging the underlying issues driving lack of
organizational performance and then capitulating to immediate needs by focusing on the
wrong issues.
What happens when organizations ignore these principles?
Ignoring these principles makes the road to PPM ROI even longer and more winding. Many
organizations give up in the middle — or get stuck in endless loops trying and failing different
things, like iterating through execution maturity to find just the right fit of methodology to map
to the organization. This is a great discussion — but it tends to distract us from where we’re
trying to get to: portfolio alignment. Similarly, I find the resource management discussion tends
to distract us from our true aims — and by distract, I mean put everything on pause for six to
eight months while we focus on something tangentially related to our goals — which then fails to
achieve our actual goals, resulting in ever increasing cultural resistance to the overall PPM story.
Curious what the path to PPM maturity looks like for many organizations? The main reason most
PPM investments fail is that they’re too limited in scope. It’s an investment in strategic
execution, and we almost always begin with operational excellence. This is certainly not without
value, but the sequence should be reversed if we want to push the needle meaningfully. It’s not
about executing better, but about aligning better.

12. Hence my tips to accelerate the ROI of your PPM investment:
1. Start with the strategy.
2. Design the organization to execute the strategy. (In other words, don’t stop at strategy, but
carry the discussion forward)
3. Involve the organizational execution folks in the discussions.
4. Wrap it all with analytics.
The major return on the PPM investment lies in getting important things done faster and in not
wasting time on things nobody particularly cares about. Follow these principles, and while you
may not have the results you need in a couple of months, you’ll certainly have them faster than
you would following a more traditional path.
The other goal destination will be:
1. IPO (Initial Public Offering)
Initial public offering (IPO) or stock market launch is a type of public offering in which
shares of a company are sold to institutional investors and usually also retail (individual)
investors. An IPO is underwritten by one or more investment banks, who also arrange for the
shares to be listed on one or more stock exchanges. Through this process, colloquially known
as floating, or going public, a privately held company is transformed into a public company.
Initial public offerings can be used to raise new equity capital for companies, to monetize the
investments of private shareholders such as company founders or private equity investors,
and to enable easy trading of existing holdings or future capital raising by becoming publicly
traded.
After the IPO, shares are traded freely in the open market at what is known as the free float.
Stock exchanges stipulate a minimum free float both in absolute terms (the total value as
determined by the share price multiplied by the number of shares sold to the public) and as a
proportion of the total share capital (i.e., the number of shares sold to the public divided by
the total shares outstanding). Although IPO offers many benefits, there are also significant
costs involved, chiefly those associated with the process such as banking and legal fees, and
the ongoing requirement to disclose important and sometimes sensitive information.
Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy
document known as a prospectus. Most companies undertake an IPO with the assistance of
an investment banking firm acting in the capacity of an underwriter. Underwriters provide
several services, including help with correctly assessing the value of shares (share price) and
establishing a public market for shares (initial sale). Alternative methods such as the Dutch
auction have also been explored and applied for several IPOs.
2. Merger and Acquisition

13. Mergers and acquisitions (M&A) are transactions in which the ownership of companies,
other business organizations, or their operating units are transferred or consolidated with
other entities. As an aspect of strategic management, M&A can allow enterprises to grow or
downsize, and change the nature of their business or competitive position.
From a legal point of view, a merger is a legal consolidation of two entities into one, whereas
an acquisition occurs when one entity takes ownership of another entity's stock, equity
interests or assets. From a commercial and economic point of view, both types of transactions
generally result in the consolidation of assets and liabilities under one entity, and the
distinction between a "merger" and an "acquisition" is less clear. A transaction legally
structured as an acquisition may have the effect of placing one party's business under the
indirect ownership of the other party's shareholders, while a transaction legally structured as a
merger may give each party's shareholders partial ownership and control of the combined
enterprise. A deal may be euphemistically called a merger of equals if both CEOs agree that
joining together is in the best interest of both of their companies, while when the deal is
unfriendly (that is, when the management of the target company opposes the deal) it may be
regarded as an "acquisition".
An acquisition/takeover is the purchase of one business or company by another company or
other business entity. Specific acquisition targets can be identified through myriad avenues
including market research, trade expos, sent up from internal business units, or supply chain
analysis. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity
of the acquired entity. Consolidation/amalgamation occurs when two companies combine to
form a new enterprise altogether, and neither of the previous companies remains
independently. Acquisitions are divided into "private" and "public" acquisitions, depending
on whether the acquiree or merging company (also termed a target) is or is not listed on a
public stock market. Some public companies rely on acquisitions as an important value
creation strategy. An additional dimension or categorization consists of whether an
acquisition is friendly or hostile.
Whether a purchase is perceived as being a "friendly" one or "hostile" depends significantly
on how the proposed acquisition is communicated to and perceived by the target company's
board of directors, employees and shareholders. It is normal for M&A deal communications
to take place in a so-called "confidentiality bubble" wherein the flow of information is
restricted pursuant to confidentiality agreements.
In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a
hostile deal, the board and/or management of the target is unwilling to be bought or the
target's board has no prior knowledge of the offer. Hostile acquisitions can, and often do,
ultimately become "friendly", as the acquiror secures endorsement of the transaction from the
board of the acquiree company. This usually requires an improvement in the terms of the
offer and/or through negotiation.

14. "Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes,
however, a smaller firm will acquire management control of a larger and/or longer-
established company and retain the name of the latter for the post-acquisition combined
entity. This is known as a reverse takeover. Another type of acquisition is the reverse merger,
a form of transaction that enables a private company to be publicly listed in a relatively short
time frame. A reverse merger occurs when a privately held company (often one that has
strong prospects and is eager to raise financing) buys a publicly listed shell company, usually
one with no business and limited assets.
The combined evidence suggests that the shareholders of acquired firms realize significant
positive "abnormal returns" while shareholders of the acquiring company are most likely to
experience a negative wealth effect. The overall net effect of M&A transactions appears to be
positive: almost all studies report positive returns for the investors in the combined buyer and
target firms. This implies that M&A creates economic value, presumably by transferring
assets to management teams that operate them more efficiently.
There are also a variety of structures used in securing control over the assets of a company,
which have different tax and regulatory implications:
a. The buyer buys the shares, and therefore control, of the target company being purchased.
Ownership control of the company in turn conveys effective control over the assets of the
company, but since the company is acquired intact as a going concern, this form of
transaction carries with it all of the liabilities accrued by that business over its past and all
of the risks that company faces in its commercial environment.
b. The buyer buys the assets of the target company. The cash the target receives from the
sell-off is paid back to its shareholders by dividend or through liquidation. This type of
transaction leaves the target company as an empty shell, if the buyer buys out the entire
assets. A buyer often structures the transaction as an asset purchase to "cherry-pick" the
assets that it wants and leave out the assets and liabilities that it does not. This can be
particularly important where foreseeable liabilities may include future, un-quantified
damage awards such as those that could arise from litigation over defective products,
employee benefits or terminations, or environmental damage. A disadvantage of this
structure is the tax that many jurisdictions, particularly outside the United States, impose
on transfers of the individual assets, whereas stock transactions can frequently be
structured as like-kind exchanges or other arrangements that are tax-free or tax-neutral,
both to the buyer and to the seller's shareholders.
Bekasi, West Java Province
Republic of Indonesia
November 16, 2019
Author and Initiator
Setiono Winardi