What Are Business Combinations?

Business is basically an entity where individuals work together to create and manage a venture. In a large business, individuals usually work as part of a team to either create and sell goods or services to clients. Other individuals also purchase the goods and services sold. The enterprise owner is usually the one who recruits individuals for employment. Thus, a business can make a profit from the goods and services that it provides.

Many businesses exist today. Often, small enterprises are the ones which succeed in the industry. However, they sometimes fail due to various reasons, the most common of which is poor planning and strategic management. The main article below offers some tips on how to better run your own business enterprise. It should be read by every entrepreneur.

Corporations and LLCs: Both these types of business entities are very similar. But, there are differences between them. A corporation is actually a separate legal entity from its shareholders and owners. This main article discusses the differences between a corporation and a limited liability company. Many countries have their own laws regarding corporations and LLCs, but the main article applies to all the countries across the world.

Limited Liability Company: A LLC is different from a corporation because a LLC does not carry any legal rights or privileges. A LLC is simply a partnership where all the partners are liable for each other. They share equal liability for any debts that arise in the course of business. A LLC is considered a private association in comparison to a corporation. Though both share capital, a corporation must issue shares to its partner while a LLC shares no shares with any other entity.

Business Combination: A business combination occurs when two or more companies combine together to form a new business entity. It is a legal agreement in which all the companies share equal liability for any debts that arise in the course of business. A company can merge into an existing corporation with all the rights and privileges of a conventional corporation. However, in a limited liability partnership, there is no requirement of diluting the equity. There is only one class of share that is allowed in a business combination – a common share.

Franchise: A franchise refers to the arrangement by which a set number of retailers are allowed to operate under one corporate business structure. There are two types of franchises – a for-profit franchise and a non-for-profit franchise. A for-profit franchise normally refers to a chain of small businesses which has many outlets and offers goods and services under one brand name. On the other hand, a non-profit franchise refers to a set number of businesses run by a non-profit organization. Under this type of franchise agreement, the business is not profit oriented and usually has a small number of outlets.

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