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Cupcake shop may not be out of business for long

Some New Jersey residents may have been aware that their favorite cupcake shop has shut their doors. Crumbs Bake Shop, Inc. specializes in gigantic gourmet cupcakes and has locations in 10 states, as well as D.C. This business may, however, get a second life.

The company went public in 2011, but it has seen steady decline in the market. The company eventually filed for Chapter 11 bankruptcy and shut the door to all of its nearly 50 locations. However, Marcus Lemonis, who stars in the CNBC reality show The Profit, wishes to buy the company through a joint venture. He, along with Fischer Enterprises LLC, would provide financing to the cupcake chain and would reform it as a privately held company.

The cupcake chain would be rebranded as a dessert shop, not just a cupcake specialty store, in order to broaden its customer base. Mr. Lemonis would seek to turn around the bake shop's steep decline over the last several years.

The acquisition of a company can be a sound economic move for both parties involved. In the above case, Crumbs Inc., will no longer be a publicly traded company, which means that management will have more internal control over the product. Management may also have more freedom to act without having to worry about board approval.

Mergers and acquisitions happen every day in the business world, and it is important to understand the difference between the two and which option best benefits the parties involved. The main difference between mergers and acquisitions is that in the case of mergers, a new company is formed, while in the latter case, a new company is not formed. Experienced business law attorneys can assist those wishing to buy a company or seeking to merge in order to form a new company. These changes can forever impact the livelihood of one's business, so it is important to ensure that one's legal rights are protected at all times and all legal options are carefully explored and examined.

Source: Chicago Tribune, "Crumbs to be reopened by local investor, Dippin' Dots owner", Samantha Bonkamp, July 11, 2014

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