Acquisition of Business Including Profit Prior to Incorporation and Post Incorporation

Acquisition of a business is a common practice in the corporate world. It is the process of acquiring ownership of an existing business by an individual or another company. When a business is acquired, it may involve the transfer of assets, liabilities, employees, and profits. There are two types of acquisition of business, including profit prior to incorporation and post incorporation.

Profit Prior to Incorporation
This type of acquisition involves the acquisition of a business that has been in operation for some time and has been generating profits. The profit made by the business before the acquisition is known as pre-incorporation profit. The following are the steps involved in the acquisition of business including profit prior to incorporation:

1. Due diligence: Before acquiring a business, the acquiring company needs to carry out due diligence to assess the value of the business. Due diligence involves a thorough examination of the financial, legal, and business aspects of the company being acquired.

2. Agreement: Once the acquiring company has established the value of the business, they negotiate an agreement with the seller. The agreement outlines the terms of the acquisition, including the price, payment terms, and other conditions.

3. Transfer of ownership: After the agreement has been signed, the acquiring company takes over ownership of the business. This involves the transfer of assets, liabilities, employees, and pre-incorporation profits.

Post Incorporation
This type of acquisition involves the acquisition of a business that has already been incorporated. The following are the steps involved in the acquisition of business post incorporation:

1. Due diligence: The acquiring company carries out due diligence to assess the value of the business. Due diligence involves a thorough examination of the financial, legal, and business aspects of the company being acquired.

2. Agreement: Once the acquiring company has established the value of the business, they negotiate an agreement with the seller. The agreement outlines the terms of the acquisition, including the price, payment terms, and other conditions.

3. Transfer of ownership: After the agreement has been signed, the acquiring company takes over ownership of the business. This involves the transfer of assets, liabilities, employees, and post-incorporation profits.

Conclusion
Acquisition of business including profit prior to incorporation and post incorporation is a common practice in the corporate world. When a business is acquired, it may involve the transfer of assets, liabilities, employees, and profits. Due diligence, agreement, and transfer of ownership are the steps involved in both types of acquisition of business.