Purchasing a Company's Assets & TUPE Regulations
Discussion
Hi
I am currently in negotiations to start up my own company and have an excellent opportunity to buy an existing business where the owner is retiring. Their profits have been on the slide for the last couple of years, but the owner puts this down to poor management by the shop manager and a lack of involvement from him. I think it is a viable business and have a business partner who also wants to invest - we are probably only looking at about £20k each to get it started.
There are a few issues, as you would expect. Firstly the company has three employees who would not be needed (or affordable) if we bought the assets, as my partner and me would work full time, with another experienced friend working 2 days a week. The question here is how could we deal with the current employees? I assume if we buy the assets and set up anew nearby, using the same trading name and customer database, that TUPE regulations would apply. We could ask the current employer to make them redundant before selling us the assets, but a legal friend of mine has suggested that it may be safer to buy it all first, then go through redundancies and factor the costs into the purchase. Any thoughts?
The company also has a large debt owed to the directors as an inherited debt from another business they had, but I have been told that this debt would stay with them and not transfer to our company, which sounds fine unless anyone knows differently?
As you can tell, I'm very new to this as I have always worked for others, but I am very keen to work for myself and having more than a decade of experience in the industry I feel it's about time!
Finally, how can directors / investors get paid? I have been told about taking a basic salary below the tax threshold, then taking dividends at the end of the year (if you're profitable). However, how can you get paid monthly, it seems unlikely that my mortgage company would let me pay once a year.....
Thanks for any help (and sorry for the rambling).
I am currently in negotiations to start up my own company and have an excellent opportunity to buy an existing business where the owner is retiring. Their profits have been on the slide for the last couple of years, but the owner puts this down to poor management by the shop manager and a lack of involvement from him. I think it is a viable business and have a business partner who also wants to invest - we are probably only looking at about £20k each to get it started.
There are a few issues, as you would expect. Firstly the company has three employees who would not be needed (or affordable) if we bought the assets, as my partner and me would work full time, with another experienced friend working 2 days a week. The question here is how could we deal with the current employees? I assume if we buy the assets and set up anew nearby, using the same trading name and customer database, that TUPE regulations would apply. We could ask the current employer to make them redundant before selling us the assets, but a legal friend of mine has suggested that it may be safer to buy it all first, then go through redundancies and factor the costs into the purchase. Any thoughts?
The company also has a large debt owed to the directors as an inherited debt from another business they had, but I have been told that this debt would stay with them and not transfer to our company, which sounds fine unless anyone knows differently?
As you can tell, I'm very new to this as I have always worked for others, but I am very keen to work for myself and having more than a decade of experience in the industry I feel it's about time!
Finally, how can directors / investors get paid? I have been told about taking a basic salary below the tax threshold, then taking dividends at the end of the year (if you're profitable). However, how can you get paid monthly, it seems unlikely that my mortgage company would let me pay once a year.....
Thanks for any help (and sorry for the rambling).
If you buy a limited comapny outright, you take on all the company's assets AND liabilities - including legal committments.
If the original company is liquidated, then the TRADE of the defunct company can be purchased without any of the baggage from the old outfit.
Obviously, if you rehire staff that formerly worked under the old company, you will be obliged to operate TUPE for them.
You need to get good legal advice.
If the original company is liquidated, then the TRADE of the defunct company can be purchased without any of the baggage from the old outfit.
Obviously, if you rehire staff that formerly worked under the old company, you will be obliged to operate TUPE for them.
You need to get good legal advice.
Eric Mc said:
If you buy a limited comapny outright, you take on all the company's assets AND liabilities - including legal committments.
If the original company is liquidated, then the TRADE of the defunct company can be purchased without any of the baggage from the old outfit.
Obviously, if you rehire staff that formerly worked under the old company, you will be obliged to operate TUPE for them.
You need to get good legal advice.
Yes, I certainly do!If the original company is liquidated, then the TRADE of the defunct company can be purchased without any of the baggage from the old outfit.
Obviously, if you rehire staff that formerly worked under the old company, you will be obliged to operate TUPE for them.
You need to get good legal advice.
I wonder if this would be complicated further by using the existing company's name to trade under, as they have built up a very good database of customers over the years and local recognition?
Thanks for the advice, I wonder if they could liquidate the old company first....
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