It was going well for the three friends Akmal Hossain, Ahsan Habib, and Imran Ahmed when they started a business "Green Supplier Ltd" in 2011, importing ingredients for food production. Starting with an initial investment of Tk10 crore, the business grew rapidly with an annual turnover of approximately Tk200 crore by 2016.
But the good days did not last long as a dispute over a bank loan among the friends led two of them to file a case seeking control over all the company's shares. Imran Ahmed ultimately won the case and restructured the company.
Then started what would be the beginning of his end. Imran struggled to manage the business alone and the impact of the Covid-19 pandemic, coupled with the Russia-Ukraine war, forced him to completely stop imports in 2022. Imran had to sell his business to another company "Linkview Ltd" to repay a Tk50 crore loan. The transfer of the company was completed in November last, with the capital of the company being around Tk106 crore.
Economic woes bite
Imran's story is just one of many, as the number of company ownership changes in Bangladesh has increased significantly in recent years.
Many small and medium-sized businesses impacted negatively due to the dual-impact of the Covid-19 pandemic and the Russia-Ukraine war are either selling off their businesses or being acquired by larger companies.
Among the companies that underwent ownership changes last year, the number of import-dependent firms was quite significant, according to the Office of the Registrar of Joint Stock Companies and Firms (RJSC).
RJSC data show 13,452 companies changed ownership in the last five years, including 3,871 in the first nine months to March of the current fiscal year.
Their total investment was about Tk23,381 crore.
Businesspeople point to the dollar crisis that is hurting raw material imports. Also, local consumers have tightened their purse strings amid a surge in inflation.
In the midst of the current economic woes, it is becoming increasingly difficult for small business owners to repay bank loans, making things worse for them, they added.
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said one of the key reasons for the increase in the change of ownership of companies is that small businessmen have fallen into a debt trap. When the ownership of a company changes, the person or company that takes over it also takes on its debts.
Change also good for starting fresh
RJSC Registrar Sheikh Shoebul Alam believes that smaller companies facing difficulties in continuing operations due to the impact of Covid and the Russia-Ukraine war might have contributed to the recent spike in company liquidation and changes in ownership.
He, however, does not see all the doom and gloom in the trend. Rather, Shoebul says, new ownerships will boost the businesses of the companies anew, which will have a good impact on the country's economy.
Sameer Sattar, president of the Dhaka Chamber of Commerce and Industry (DCCI), however, said even though small companies might do good business after being acquired by larger companies, their previous owners, directors, or shareholders have lost their assets to the market condition.
"These people are also a part of the national economy. Therefore, the government and various trade organisations need to come forward so that small companies can also survive amidst this downturn," he added.
Commerce Minister Tipu Munshi said changing company ownership is a normal thing. The number of companies and businesspeople as well as scopes of businesses are increasing, so many old companies are transferring ownership.
He, however, said there are various initiatives on the part of the government to make sure small and medium companies can run well.
More companies waiting for changing hands
According to RJSC sources, about 308 more companies are in the process of change of ownership. The total capital of these companies is about Tk3,000 crore.
Among the companies seeking ownership transfer are Amazing Fashion Ltd, Star Automobile Manufacturing Company Ltd, Safeco Logistic and Management Company Ltd, Ocean Rich Garment Accessories Company Limited, K Hamid and Company Ltd, Global Commercial Company Ltd, Reliable Power Sources Company Ltd, and Gasko Industrial Services Company Ltd.
Amazing Fashion's Managing Director Mamunur Rashid Dulal told TBS that they used to manufacture shirts and pants and would sell them all over the country. But due to the long-term downturn in business, he has been forced to sell the company.
Why company acquisition is preferred
An export-oriented garments company, Millennium Fashion Ltd, has reached an agreement to acquire Amazing Fashion for Tk55 crore. An official of Millennium Fashion told TBS that his company has opted for the acquisition with a view to doing business in the local market alongside exporting products abroad.
Asked the reason for the decision, the official said starting a new company involves many challenges. Besides, a new factory requires new manpower.
But those hassles can be avoided by acquiring a company that is already in operation, he further said, adding that an old company also has acceptance in the market, which makes it easy to conduct business in the name of the company.