A successor company takes the business (products and services) of the previous companies with the goal to maintain the continuity of the business. To this end the employees, board of directors, location, equipment and even product name may remain the same or change only slightly at the moment of succession.
by Jennifer F. Bender, ''

Houston Chronicle The ''Houston Chronicle'' is the largest daily newspaper in Houston, Texas, United States. , it is the third-largest newspaper by Sunday circulation in the United States, behind only ''The New York Times'' and the ''Los Angeles Times''. With it ...

'' The major advantage is saving the money for the initial ramp-up (employee training, equipment purchase, marketing, etc). If the previous company was failing, this is a disadvantage for its successors in various respects. If the successor succeeds where the predecessor failed, the company may be called a "

Phoenix company A phoenix company is a successful commercial entity which has emerged from the collapse of another through insolvency. Unlike " bottom of the harbour" and similar schemes that strictly focus on asset stripping, the new company is set up as a lega ...

" ("rising from the ashes"). In general, the successor is not responsible for the liabilities of the predecessor, unless the consent was given to this, or a court decided that the succession was not "clean hands"; e.g., the successor was ''de-facto'' the same company, of the succession transfer was an instrument to avoid liabilities. In the corporate world, successor corporations are typically created by

mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...

or liquidation of existing businesses. In order to conclude whether a corporation is a legal successor of previous businesses, connections between them must be analyzed. A rather evident case is when the corporations keep nearly the same senior management or there is a close connection between the old and new management. Other contributing indicators include same trade, same workforce, similar company and product names, and substantial asset transfer between successors and predecessors "What Is a Successor Corporation?"
by Denise Sullivan, ''

'' The term successor in business has similar meanings. Various legal documents typically include formal definitions of the terms used in them, including the ones discussed here. A typical example would be: "Successor in Business means (a) an entity which acquires all or substantially all of the undertaking and/or assets of either Issuer or of a successor in business of either Issuer; or (b) any entity into which any of the previously referred to entity is amalgamated, merged or reconstructed and is itself not the continuing company". In the case of liquidation or

dissolution Dissolution may refer to: Arts and entertainment Books * ''Dissolution'' (''Forgotten Realms'' novel), a 2002 fantasy novel by Richard Lee Byers * ''Dissolution'' (Sansom novel), a 2003 historical novel by C. J. Sansom Music * Dissolution, in mu ...

, there may or may not be a legal successor created. VOSZKA, É. "COMPANY LIQUIDATION WITHOUT A LEGAL SUCCESSOR." ''

Acta Oeconomica ''Acta Oeconomica'' is a quarterly peer-reviewed academic journal published by Akadémiai Kiadó. It covers theoretical and general issues related to the East European and Hungarian transition processes, economic policy, econometric methods, an ...

'', vol. 37, no. 1/2, Akadémiai Kiadó, 1986, pp. 59–71

References

Corporate finance Corporations Business ownership {{business-stub

See also

References