Successor Corporations

Successor Corporations

Successor Corporations

A successor corporation is a new business that arises out of a prior existing one. It is important to keep in mind that taking over another business can leave the new business open to liabilities. It may be in your best interests to work with a Bryan business lawyer if you wish to create a successor corporation.

How Successor Corporations Occur

In the majority of cases a successor corporation is created through an acquisition or merger. By taking over the existing corporation a new business entity is created. Your company may purchase another business, and in the process create a new name and identity. The terms of the agreement will mean that the property, financial assets, obligations and equipment become the property of the new company. Ideas, knowledge and contacts that were held by the former corporation also become the property of the new one.

Be Careful When You Acquire a Business

You need to be clear on the fact that by taking over an existing business you accept its assets, but also its liabilities. It is often the case that a company will try to escape liabilities such as tax obligations through a merger with another company. If you are not aware of the company’s liabilities prior to the acquisition you may be left with being obligated to repay these liabilities. You might have recourse through a lawsuit, but the court may decide that by accepting the merger you should have been aware of any liabilities, and therefore they are yours to repay.

When a business that is seeking to acquire another does become aware of existing liabilities, this can often disrupt negotiations. You should be aware also that if an individual or entity was seeking to sue the former corporation, your company may become the subject of the lawsuit and be liable for paying damages.

If You Are Seeking to Create a Successor Corporation

Acquiring a business can lead to unexpected liabilities if you are not careful. It is important that you hire a Bryan business lawyer who can help you unveil any information about the business that is the object of your acquisition. Call Peterson Law Group today to arrange a consultation at 979-703-7014 or 936-337-4681.

 

 

About Chris Peterson

Chris Peterson is an attorney and the owner and founder of Peterson Law Group, a Texas law firm with offices in Bryan/College Station and Kingwood. He mainly practices in the areas of Estate Planning and Business Planning. Chris is also a Certified Estate Planner. Besides his law practice, Chris is a serial entrepreneur and community volunteer. He is known for his cutting edge law practice that utilizes technology to deliver efficient, excellent work.