Taking Over Family Business (Ltd Company)

Farm King

My parents limited company has ceased trading in the past year and they are considering winding it up. However, I am interested in taking it over from them. The company has no assets and owes nothing. I would really be just taking over the business name and rebuilding it from the ground again. In my opinion the company is not worth anything / very little. How do I go about this and how much would it cost both me and my parents to go down the various options (ie. winding up versus selling to me). Also what are the tax implications involved?

srsly78

If it's worth nothing then then it's not such a big deal. Just have them give you all the shares, then hold and agm to make you managing director. Register forms with CRO for this, or get accountant to do it.

Are you sure you don't want to create your own new company? Are you sure the old company has no kind of baggage hidden in it's books? Have you considered operating as a sole trader instead?

Crocked

If it's just the business name you are looking for then just buy the name off them for a nominal sum, or whatever value they deem it to be worth and setup your own ltd company.

Peterdalkey

If you do decide to take it over, make sure rthat all the annual returns to the CRO are up to date before you do so. tyhey have to be made whether the company has traded in the period or not. I agree with srsly78, the whole point about skeletons is that they do not become apparent until too late to do much about them. A new clean company is always better and safer.
you could get your parents to register the business name of the existing company without the Limited before they wind it up and then transfer that to you, you could use that style as a sole trader or as a trading name of a new ltd company. This is an area where belt and braces are never too much.

Cheers

Peter

Farm King

srsly78 wrote: »

If it's worth nothing then then it's not such a big deal. Just have them give you all the shares, then hold and agm to make you managing director. Register forms with CRO for this, or get accountant to do it.

Ok - seems straightforward enough. Will this cost either party much?

Are you sure you don't want to create your own new company? Are you sure the old company has no kind of baggage hidden in it's books? Have you considered operating as a sole trader instead?

I'm not pushed about it being my own company - it would mean alot to me to takeover the existing company. Regarding baggage hidden in the accounts, I don't expect to find any but I would still have a thorough check carried out by an independant accountant to make sure.

Crocked wrote: »

If it's just the business name you are looking for then just buy the name off them for a nominal sum, or whatever value they deem it to be worth and setup your own ltd company.

Would this option not mean that they will still have to pay for the winding up of the existing company while I have the cost of setting up a new company

Peterdalkey wrote: »

If you do decide to take it over, make sure rthat all the annual returns to the CRO are up to date before you do so. tyhey have to be made whether the company has traded in the period or not. I agree with srsly78, the whole point about skeletons is that they do not become apparent until too late to do much about them. A new clean company is always better and safer.
you could get your parents to register the business name of the existing company without the Limited before they wind it up and then transfer that to you, you could use that style as a sole trader or as a trading name of a new ltd company. This is an area where belt and braces are never too much.

Cheers

Peter

Again with this option - is it not a more expensive way to do it?

srsly78

Only costs e100 to set up a company.

Either way there will be some small fees to pay for filing CRO forms.

The bulk of your fees either way will be paying accountant.

scwazrh

If the balance sheet is clean just take the company over.you will save your folks the liquidation fee and save yourself the hassle of setting up the new company with new bank accounts etc.you'll also benefit from having a company with several years trading history and little things like phone numbers , business stationery , previous advertising and any goodwill that may be there from previous customers.
Depending on business type you can play to the whole image of the next generation taking over the business . Most importantly though is make sure the creditors account is zero.

dbran

Hi

I would be with scwazrh on this one.

OP is taking the company over from his parents ie not from complete strangers so the chances of there being skeletons in the closet that you have not heard about or massive unseen liabilities are greatly reduced.Think about it... they are your parents, they are not going to shaft you willingly.

Setting up a new company could prove problematic as you will have to get all of the customers to change their bank account details contacts etc. Also there is the perception that when a business changes to a new company in the same place etc that there is something going on behind the scenes which may have a detrimental effect on the goodwill of the business. That is what I would be thinking. Why is he changing to a new company? What was wrong with the old one? Is this a Phoenix Syndrome type event? If so will the same thing happen again with the new company? What will then happen to me if I am owed money? Do I therefore want to continue to do business with them or will I check out the competiton.

So I would say, of course do your due diligence but if at all possible keep the old company. Why did the business cease trading anyway. Are you sure it is profitable?

Good luck with it.

dbran

Peterdalkey

I was never for a moment suggesting that his parents would deliberately hide anything, but it is the possible unseen past error in perhaps matters Revenue that could be a problem. just a general caveat.
We do not know whether it was a retail or b2b business, traded on credit or cash, but the fact that has already ceased trading will have reduced the value of the goodwill and of course there is currently no ongoing trade.
The name of the business may well be worth having, depending on things like how long they were trading, and any USPs/branding etc. There are, as outlined above, several ways to achieve essentially the same end.
Coming up with a business plan/rationale and investment to resurrect a business that has already failed/ceased trading is a far far greater challenge than the few bob one way or another to be spent the corporate structure.

Best of luck OP whatever you decide to do

Cheers

Peter

Farm King

The business is in the construction industry and has a good name. I am fairly familiar with the business and there are no skeletons in nthe closet as far as I am aware. I of course will have the books fully checked out by an independent accountant and take i from there.

nipper banks

Best of luck with it. Just make sure you check that all the returns in the CRO (Company Registration Office) are up to date. It costs nothing to do this. Then make sure the share transfer to you is also registered with CRO