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What's best: creating a company, or taking over a pre-existing one?

When the question of starting an independent activity is raised, often the answer is to create a company, but the solution is not so straightforward. Another possibility exists: taking over a company. How to chose between the two, and why? Is there a correct answer?

There are fundamental differences between these two options, but also some shared aspects.

Creating a company means starting from scratch, everything has to be conceived, from the idea of a product or a service to how to commercialize it. In this situation, the new entity is often an extension of the company's leader in terms of know-how, organization, ideas, or even, values. The downside of this option is a reduced visibility. Success forecasts and hypotheses are mostly based on market studies and on an evaluation of the situation. Therefore, the uncertainties concerning these forecasts are not neglectable, which can limit to some financing sources.

Taking over a company implies starting from an existing company while injecting new ideas and a new dynamic into it. The forecasts are easier to draw, given the company's history. The risk is therefore less important for the entrepreneur and the potential investors, if the pre-existing activity continues. The counterpart for this reduced risk is the necessity for an initial investment, which is often sizeable, because buying a healthy company comes at a price, but more financing resources can be found. The risks are often related to hidden defects. It is therefore crucial to analize correctly the company to be taken over.

Despite these important differences, in both cases, the future company leader must be able to face uncertainties, to take decisions, to innovate, to be responsible for his or her partners or employees... This list is not exhaustive, but the common point is the role of the company director.

In the end, the choice between either option is often a question of opportunity, ability, or entrepreneurial sense. Whatever the final choice may be, it is important to surround oneself with professionals ready to give advice.

Cécile Enjolras, responsable de projet, Promove : +41 21 943 48 48 | Email | LinkedIn