Purchase of a busienss withour debtors and creditors

swetasweta New MemberPosts: 13Registered
Hi,


I have a client who is buying an existing business and has asked me to review last years balance sheet and P & L account. This business has debtors and creditors on their balance sheet.

In his discussion with the business agent he has been told there are 2 ways to handle this, the first being that he purchase the shares of the owners in the business. This will however mean that debtors and creditors are taken over by my client (which he does not want). Second option is that if he goes ahead with the purchase that his company purchases the goodwill, fittings and stock. The selling company will change company name while taking over the debtors and creditors. The name ABC company will then also be handed over to my client

Can you recommend a method whereby he can avoid taking on the debtors and creditors, obtain the business with their companies house registration number ?

Never come across this scenario any help and advise would be highly appreciated.

Comments

  • Hasan.AhmetHasan.Ahmet Feels At Home Posts: 87Registered
    (which he does not want) means your client wants to buy the business premises, fixtures and fittings, goodwill if any.

    "Can you recommend a method whereby he can avoid taking on the debtors and creditors, obtain the business with their companies house registration number ?"
    It's not clear to me what you mean here. You can't just dump the debtors and creditors by changing the shareholders of the company, if that's what you mean.
  • burgburg Experienced Mentor GloucesterPosts: 1,440Moderator, FMAAT, AAT Licensed Accountant
    In many cases the person purchasing the business does not wish to take on the previous company as a whole entity. This means taking on another company's accounts history, VAT history, PAYE history and the potential for investigations to still pop up as well as taking on their debtors and creditors.
    Regards,

    Burg
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