What are the Advantages and Disadvantages of Buying an Existing Limited Company?

Buying an existing company is often a quick way to get ‘up and running.’ It may well be that the business in question has underperformed or you believe that your skill and expertise will enable you to be more successful than the current owner. As with all major decisions there are a number of important points to consider in buying a business:

• Take appropriate financial and legal advice.
• Carry out your own due diligence.
• Fully understand the advantages and disadvantages of buying a business.

Advantages

• The business is ‘up and running’ already.
• It is likely to have an existing client base.
• The previous owners are likely to lend support and goodwill.
• The business can be sold on by you.
• Generally more chance of success than starting a similar business from scratch.

Disadvantages

• A large investment is often required.
• There can be significant hidden costs with lawyers and accountants.
• The risks of failure are potentially greater.

We can not stress enough how important it is to recognise the limited company advantages and and disadvantages before you proceed with any decision on this matter.