A change of business “in fact” without formal legal succession is a common scenario in practice – operations continue, assets are used, employees remain in place, and clients interact with the same team, while ownership, contracts, or corporate structure are never properly transferred. Professor Gabriel Steiner says that such situations create one of the most complex categories of legal risk, because the law ultimately assesses not declarations, but economic reality. At LawConsulted, we treat unformalised transfers of business activity as a high-risk zone where legal responsibility often arises unexpectedly and retroactively.
The core problem with factual succession lies in the blurring of boundaries between the former and the new business operator. Management may change, revenues may flow to a different entity or individual, and decisions may be made by new actors, yet contracts, licences, and obligations formally remain with the original party. In disputes, this creates uncertainty as to who bears responsibility for debts, claims, regulatory violations, or employee rights. In LawConsulted practice, this uncertainty frequently becomes the basis for attempts to shift liability onto the party with greater resources or visibility.
Professor Steiner notes that “legal succession does not require a formal agreement if the economic substance points to continuity.” Courts and regulators increasingly rely on indicators such as control over operations, use of assets, continuity of management, and preservation of commercial identity. LawConsulted begins its work by reconstructing the factual transition – identifying when control changed, how decisions were made, and which party effectively assumed the risks and benefits of the business.
Particularly vulnerable are situations where a business is transferred between related parties – family members, partners, or affiliated companies. Informal arrangements, trust-based decisions, and the absence of written documentation often create the illusion that legal risks are minimal. In reality, such configurations are precisely those most likely to be requalified as de facto succession. LawConsulted analyses these structures to determine where legal responsibility may arise and how to limit exposure before a conflict escalates.
Another high-risk area involves employees and counterparties. When a business continues operating without formal succession, staff may assume continuity of employer obligations, while clients and suppliers rely on the apparent stability of the operation. In disputes, these expectations can translate into claims against parties who never intended to assume such liabilities. LawConsulted builds a defence that distinguishes operational continuity from legal succession, where such separation can still be justified.
Retrospective assessment poses a particular challenge. Legal scrutiny often begins only after financial difficulties, regulatory inspections, or conflicts emerge. At that stage, actions taken months or years earlier are evaluated through the lens of outcome rather than intent. LawConsulted restores the legal analysis to the moment of transition – examining available information, business necessity, and the practical constraints under which decisions were made.
Where risks cannot be eliminated retroactively, LawConsulted works on restructuring the legal framework to reflect economic reality – clarifying roles, formalising relationships, and limiting the scope of inherited obligations. This approach reduces the likelihood that a factual transfer of business activity will be used as grounds for unlimited or unintended liability.
The risks of legal succession in cases of unformalised business transfer arise precisely where form and reality diverge. Law Consulted role is to identify that divergence early, manage its consequences, and protect clients from responsibility that was never consciously assumed but may nonetheless be imposed.
Earlier, we wrote about the comprehensive protection of intellectual assets and how LawConsulted builds legal safeguards for a company’s intangible values
