BAGFACTORY is a non-woven PET bag manufacturer, a market leader in Lithuania and one of the market leaders in the EU. However, the recentgrowth of this company was driven by the transfer of 50 percent of its’ share to the legal entity, so is a great example of good business transfer case.
Originally the company was owned by two individual persons and was oriented to exclusive small orders therefore was not very profitable, but satisfactory at the time. However, over the years the manufacturing equipment of the company has outdated and since the main activity of the company wasn’t very profitable, the owners could not afford the necessary equipment upgrade, which became one of the main reasons of undertaking the transfer’s decision. The owners of business started looking for investment opportunities and got acquainted with a legal entity, which became interested in PET bag manufacturing business on a larger and more innovative scale so has bought 50 percent of its’ share and invested a certain amount to the manufacturing equipment as well as started a regular work optimization process to reduce costs and production time. As a result, the company has the most modern, innovative, state of art equipment on the market, and has been renamed as BAGFACTORY.
The process of the initial business transfer to new shareholders, as well as new ideas and opportunities, has happened because of the shared business values of both sides, which are social orientation, positive thinking and a close-knit team. However, the new owners brought some new ones as well, such as initiative, innovation and ambition, which are vital for successful and profitable business, so were the main factors of the recent success of the company. The process of business transfer took around one year, including negotiations and re-registration of the company.
The main challenges/difficulties of this business transfer case were met meanwhile the transfer, because it was the time of negotiations, where both parties had to agree on (1) their future rights, responsibilities and accountabilities; (2) formation of a new company strategy; (3) the use of investment as well as return on investment (payback procedures); (4) maintaining the most important strategic human resources in the company in order not to lose the know-how. Once both parties agreed onthese strategic decisions, the business transfer was completed smoothly.
The business transfer facilitated implementation of innovations – BAGFACTORY is initiating new research and experimental development projects in order to reduce the use of plastic disposable bags, contribute significantly to the reduction of environmental pollution and achieve its mission – innovative ideas for the development of ECO-friendly shopping bags.
100% individual persons
50% individual persons 50% legal entity
Legal form of the company
Joint Stock Company
Joint Stock Company
Number of employees
Model of transfer
5 Transfer to another company
The main institution, involved in the business transfer process, was a law firm, because business transfer process requires a lot of negotiations and accompanying documents. The services provided were sufficient. The cost of the law firm services is a subject of contract and depends on mutual consensus as well as the scope of work.