Business Ownership for Established Businesses Flashcards

All 4 cards in this deck

Give one advantage of a private limited company over a partnership, other than limited liability.

Any one of: the company carries on if a shareholder dies or leaves; banks are usually more willing to lend to it; it can raise capital by selling shares to new shareholders.

Give one advantage to a growing business of becoming a plc.

Any one of: it can sell shares to the general public, raising large amounts of capital to fund growth; its higher profile and status can make it easier to borrow from banks.

Give one drawback to the original owners of becoming a plc.

Any one of: issuing new shares dilutes their ownership, so they may lose control or face a takeover; flotation is expensive and takes management time.

True or false? An established business can change its type of ownership as it grows.

True. For example, a partnership can become a private limited company.