Continuity of Business Enterprise Law and Legal Definition

Continuity of business enterprise refers to a legal doctrine covering acquisitive reorganizations. Under this doctrine, an acquiring firm carries out an acquired firm's usual business. An acquiring firm must also employ a significant portion of its assets in the new business to qualify an acquisition as a tax-deferred transaction.

In Skelton v. B. C. Land Co., 256 Ark. 961 (Ark. 1974), it was held that the there is a continuity of business enterprise when an income producing business has not been altered, enlarged or materially affected by a merger.