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When purchasing an established business it has a pro as well as a con.
The pro is you have business with a known established article of operations that includes a product/service, established operational property, staff and consumer base as well as established contracts, vendors or other resources.
The con you also attain and acquire any negative principals of and established business this may include but not limited to loans, debt, and even potential lawsuits or established on-going payments based on legal rulings or legal contracts that may not be broken such as with service vendors or contractors to whom the new owner may not care to do business.
Many business that are purchased may have pending the type of operations may undergo restructure changes to manage the cons away from the main objective to attain an established company on such practice is the break up of a companies operations selling off components that are less desired and keep the most profitable portions of business operations - some new laws doing so have been instigated as this was a common practice in the 1980's in most cases dumping mass corporate deficits of a business for taxpayers to pick up the tab.
Today, more in line of alternate practices such as managing the losses of a business component and reducing impact on component loss away from the operations key beneficial holdings to maintain a steady longevity and on-going operation for attaining an established business. It takes comprehensive analysis, structural planning, organizational and proficient implementation course of actions objective plans in advance towards obtaining any established business to ensure it's ownership is actually a secured investment.
Simply put ensure you know any disclosures that may impact the future of this established business from costing more than it's worth or ensure you have the resources, and or a clue such as solid concept of plans to manage the businesses before acquisition.
Wiki User
∙ 11y ago
Purchasing an established business means buying a company that is already in operation and has a track record. This includes acquiring its assets, customer base, brand, and existing contracts. It allows the buyer to take over an existing business and continue its operations, rather than starting a new business from scratch.
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