Enterprise acquisition is when a company attempts a takeover of another company without creating a new legal entity.

Large-companies will usually acquire smaller and weaker companies that are experiencing economic difficulties but has high potential. This presents a big advantage since the acquired company already had its resources.

Small companies, upon being acquired, will merge and be managed by large the larger companies. This is much better than going bankrupt and/or the challenge and struggles of surviving.

First and foremost, the decision of acquisition must be ratified. When acquiring an enterprise, the owner must ratify the policy on enterprise acquisition. For a sole proprietorship, a type of business with one owner, the owner possesses the total authority to decide on selling his company.

Secondly, signing th acquisition contract. Upon ratifying the decision to sell the company and a “suitable buyer” has been found, both parties begin negotiations and enter into the contract. At this stage, both parties specify, negotiate, and conclude the targeted value of the company.

Pursuant to the provisions, the owner of a sole proprietorship – after selling his business – continues to be liable for the debts and other property obligations of the enterprise acquired prior to the date of transfer. However, if the buyer, owner, or creditor has another agreement, they must comply with that agreement. Hence, if there is no agreement in the contract regarding the property obligations of the enterprise, the responsibility lies with the owner of the sole proprietorship.

Lastly, registering the change of ownership. The buyer of the sole proprietorship registers only the change of owner, not having to re-perform the business registration.

Required documentation: