I current run a small business (limited company)reselling specialist engineering components and have come across an opportunity to purchase a similar smaller limited company. There is only one owner director / employee, so no complications there other than they just want to remove themselves from the business as cleanly and quickly as possible. Because the owner has very little capital they want to do the transfer without solicitors etc. I am trying to find the most economic but safe way forward for us. My thoughts are as follows I would like to reach an agreement to purchase the stock they have, confirm transfer of the distribution agreement they have with their prime supplier, check out the current accounts and ensure that all their debts can and will be paid.
As ultimately I don’t particularly want to run two separate limited companies I would like to close the purchased company down, but still run it under its name without the limited, but as an XYZ Trading As ABC, so all the business managment and accounting would then come under my existing business.
Does this sound feasible? what are the pitfalls, what procedurs do we adopt to close the company and can you suggest an action plan as I have never done anything like this before. Just as a bit of background, my existing business has been going for nearly eight years and is owned by myself and wife only, we have fortunately consistently made good profit and are in a position to fund the acquisition from our company resources without overstretching ourselves financially, our turnover last year was around £265K, the company we are looking at purchasing is currently turning over around £60K with similar % gross margins to ourselves. I look forward to you advice. Please feel free to reply via my email if you think it more appropriate.
Regards
Carl