Hello everyone! Recently many people have been asking me: “I have a licensed corporation in Hong Kong (e.g. Type 1/4/9 license) that I want to transfer, but I have no idea how to price it, how to ‘package’ it, or how to connect with buyers?” Today, let’s discuss what sellers need to pay attention to, so you can have a smoother, more profitable transfer process while protecting your interests.

1. Why do market prices vary so much?

• Why does the same company get quoted different prices? The most typical aspect of license trading is “information asymmetry”, plus the existence of multiple intermediaries.
  • You might hear some brokers say “your company can sell for 3 million HKD”, while others say “only 2 million HKD”. Don’t be surprised, this is quite common.
• Multiple intermediaries taking cuts The buyer’s offer might be decent, but you only get a portion. Many brokers work in layers taking commissions, so to maximise your net proceeds, you must understand the intermediate steps to avoid working for nothing.
• The company’s compliance record affects the price Companies with good historical compliance and healthy finances can sell for more; if previously penalised by the SFC or having messy finances, this will affect negotiations. Tip: Before negotiating with brokers or buyers, first understand your company’s “market value range”, and whether the quoted price includes hidden fees or broker commissions.

2. Before selling, do a company “health check”

• Compliance record self-check
  • Has the company received warnings or fines?
  • Are there customer complaints or potential litigation? Resolve what you can in advance, and if possible, get some adverse records withdrawn or explained – this helps increase valuation.
• Financial accounts standardisation
  • Buyers will check your financial reports, tax records, staff payroll, etc.
  • The clearer, more compliant, and free of “unclear accounts”, the more reassuring and higher the valuation.
• Personnel and operational status
  • If the company is operating, best to provide a client list (with sensitive information redacted) or revenue details, showing real profits and client quality.
  • If it’s a “shell” with little operation, then ensure “zero burden” – reduce historical debts and complex contracts; cleaner is better for selling. Tip: Many sellers only start preparing materials during negotiations – that’s too late! Do a “health check” early for more confidence in price negotiations and to help screen quality buyers.

3. How to find suitable buyers or intermediaries?

• Direct sale OR broker?
  • If you have friends/colleagues in your network interested in acquiring, direct negotiation is certainly more transparent.
  • If not, you’ll need to select a professional broker or consultant to connect you with potential buyers.
• Be cautious with multiple intermediaries
  • Often, you engage broker A, who then finds B, who finds C… ultimately the price gets layered through multiple hands, and communication efficiency drops.
  • Sellers should ask upfront: “Do you directly connect with buyers? Is direct communication with buyers allowed at certain stages?”
• Assess broker professionalism
  • Have they handled similar license sales cases?
  • Are they knowledgeable about Hong Kong SFC requirements?
  • How is their fee structure? Fixed fee OR percentage OR hybrid model? Tip: Avoiding roundabout routes is key! Finding a broker with real resources who can directly introduce buyers is more cost-effective and transparent than multiple layers of intermediaries. If a broker won’t allow direct buyer communication, check if their agreement and confidentiality mechanisms are sufficient to give you peace of mind.

4. Key negotiation points: How to secure higher net proceeds?

• Have a reasonable target price
  • Consult with professionals or friends familiar with the market to understand average prices, then set your bottom line based on your company’s features (good compliance, existing clients, operational revenue, etc.)
• Clarify broker fees
  • If you’ve engaged the broker, negotiate their commission.
  • If the buyer’s broker is involved, understand their commission structure to avoid unexpected large deductions later.
• Consider different transaction structures
  • You don’t have to sell all equity at once; discuss retaining partial ownership with buyers, using a “transfer and payment in stages” model; or include performance clauses for subsequent payments, providing more protection for both parties.
• “Package” your company’s highlights
  • If you have stable client sources, good compliance records, reliable management team – present these clearly.
  • Help buyers understand they’re not just buying a shell, but an immediately operational licensed company, saving considerable time costs. Tip: As a seller, showcase core advantages early in communications to build buyer confidence and secure better prices. People aren’t looking for “scrap metal” but the value behind your company.

5. What “landmines” to watch for before and after signing?

• Legal documents and payment methods
  • When signing an SPA (Share Purchase Agreement), carefully review terms: payment schedule, share transfer percentage, handover procedures, transition dates, etc.
  • Focus on “breach handling” provisions – what protection do you have if buyers back out or delay final payments?
• Handover process
  • For operating companies: How to transfer client contracts, employee contracts, supplier relationships? How to change internal systems and account permissions?
  • For “shell” licenses: Any remaining debts? Outstanding tax issues? Specify responsible parties in documents.
• Communication with RO (Responsible Officer)
  • If the company has a current RO, confirm with buyers whether to retain or replace them.
  • The RO must clearly understand the transfer process and subsequent responsibilities to avoid non-cooperation.
• Don’t make excessive promises
  • Avoid overselling or verbally promising future returns to close the deal. License operations are heavily influenced by regulatory factors; disputes could arise if buyers blame poor future performance on you. Tip: Once in the specific signing stage, don’t cut corners. Get lawyers and accountants to review contracts when needed – this expense is worth it! Ensuring transaction safety and compliance reduces future worries.

6. Don’t forget these post-transaction matters

• Public disclosure and renaming After completion, update company name and shareholder structure in CR (Companies Registry) and SFC systems.
• Notice to clients or partners (if operating)
  • Inform them of ownership or management changes to maintain trust and service continuity.
• Exit mechanism
  • If partially exiting with continued operational cooperation with buyers, agree on future exit mechanisms, profit distribution, and equity management.
• Complete payment collection
  • Don’t rush to fully hand over the company; wait for all agreed payments to be received and confirmed before transferring core assets like seals and documents to buyers. Tip: While sellers often rush to collect payment, maintain composure and ensure each payment arrives on schedule to protect your interests.

7. Summary & Insights

• Pre-sale preparation:
  • Ensure compliance, financial, and operational materials are complete; prepare a “selling points list” for clear buyer understanding and higher price potential.
• Compare brokers or channels:
  • Avoid multiple layers of intermediaries taking cuts; more direct connections maximise your final proceeds.
• Attention to transaction agreement details:
  • Every clause can affect final funding and smooth completion, especially payment methods, transfer procedures, and breach responsibilities.
• Don’t underestimate subsequent handover complexity:
  • Even after selling, historical operations, clients, and employees need individual handover, unbinding, or transfer – avoid leaving loose ends.

Final Tips:

• Compliance = core license value. For good pricing, prioritise compliance.
• Don’t blindly inflate prices or trust brokers offering “extremely high prices” – they might just be fishing for agreement signatures.
• Timely engage lawyers, accountants, and compliance advisors to avoid missing major risks and key documents.

These are my summarised seller considerations!