Questions Answered by Jonathan R. Roth

Q: What type of corporate entity should I choose for my business to attract a buyout by an investor?

1 Answer | Asked in Mergers & Acquisitions for California on
Answered on Jun 23, 2017

If you mean to have someone buy your business in total from you, the choice of entity is not that important since the Buyer is going to want to do an asset purchase. If you are talking about an investor buying into your business that is different and it will depend on both the kind and size of the investor. Generally, LLCs are used most often in early stages and then if you go public you convert into a corporation. Without knowing more details it is difficult to make a definitive...
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Q: If someone has expressed interest in buying my company should I have them sign an NDA before we talk specifics?

3 Answers | Asked in Mergers & Acquisitions for New York on
Answered on Jun 23, 2017

Yes. Before you give them any information you should have them sign a NDA and even then limit the information until at least an offer subject to due diligence is made.
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Q: How do I structure a 501c3, when my plans are to grow to national and hyper-local chapters?

2 Answers | Asked in Contracts, Mergers & Acquisitions and Business Formation for Florida on
Answered on Jun 14, 2017

Given your goal each chapter would have to register in its own state and they would apply for a 501 (c)(3) as an affiliate or related entity to the parent group. You need a good local business attorney to assist you.
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Q: When is the best time to sell a business?

1 Answer | Asked in Mergers & Acquisitions for Michigan on
Answered on Jun 9, 2017

It is completely dependent on the type of business you are selling. If you are selling a seasonal business like one dependent on beach or summer vacation traffic, then before the season starts. Ultimately a well educated buyer is going to evaluate the business on its last 3-5 years of operations and will want to understand its cash flow on a monthly and quarterly basis. As to a time of year, unlike the purchase of homes, there is no real prime time to sell a business although actually entering...
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Q: What are the advantages of a stock sale over an asset sale?

2 Answers | Asked in Mergers & Acquisitions for New York on
Answered on Jun 2, 2017

The advantage of an asset sale to the Buyer is that the Buyer can avoid undertaking any unwanted liabilities of the Seller. The advantage of a stock sale to the Seller is that he can avoid any depreciation recapture from the sale of equipment. However, if done properly the asset sale can work as well as a stock sale for the Seller. The result is usually the creation of good will which the Buyer will amortize over 15 years. There are a lot of variations of these two sales and each has its...
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Q: If a larger entity buys out the company I work for, can they change employee benefits?

1 Answer | Asked in Mergers & Acquisitions for California on
Answered on Jun 2, 2017

It depends on how the larger company acquires your company. If it purchases its assets only, it is likely that it can all the benefits and will offer all or less than all current employees whatever benefits it currently offers its other employees. If it buys the company's stock, unless it is bound by a union contract or an employee contract it can change the benefits but things like pension plans, 401K plans can be changed but there is a more complex way to do that under the legal...
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Q: Am I a victim of wage theft? Is there a way to make my employer pay me for my hours worked?

2 Answers | Asked in Employment Law and Small Claims for Massachusetts on
Answered on May 30, 2017

More information is needed, but if you are an employee and not a consultant, the Employer has to pay you. If you are a consultant more information is needed as to penalty clauses et cetera.
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Q: I was robbed by a coworker she was caught on camera stealing my money I wanted to press charges the employer did not.

1 Answer | Asked in Employment Discrimination and Employment Law for Massachusetts on
Answered on May 30, 2017

You have every right to file a criminal complaint.
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Q: Would a UCC search on an entity show me all liens, warrants, and the like available in public records for that entity?

1 Answer | Asked in Mergers & Acquisitions and Business Law for Florida on
Answered on May 25, 2017

It will show you all commercial liens, but not necessarily all warrants or judgments or attachments. Likewise, it will not show you state or federal tax liens or liens against real property. Tax liens you need to check with the state and federal government sites. IRS liens can be searched at the Federal Court closest to you usually. For state tax liens contact the state Treasury or department of revenue for the state. Mortgages and other liens on real estate will be found where the deed to...
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Q: Am I entitl My granfather's estate he left to second wife ( not my grandmother). She died and had no heirs.

2 Answers | Asked in Estate Planning, Real Estate Law and Probate for Massachusetts on
Answered on May 23, 2017

Unless there was a Will or Trust that provided for part or all of the estate go to your father or his children, then you have no claim against the estate.
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Q: My father wants to take over a printing business and wants me to put the business in my name. He has an investor friend

1 Answer | Asked in Business Formation, Business Law, Family Law and Mergers & Acquisitions on
Answered on May 23, 2017

First as the owner you will be responsible for all debts and operations of the business. So to start, the business should be put in a corporation or LLC. You can be the sole manager and thus have control of the business and the investor and your father can own percentages of the business as well. I think you need to speak to an attorney and make sure you are protected so that this business does not put you in bankruptcy if something goes wrong. If the business leases property, you may need...
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Q: If I don't specifically bequest property in my will, does it all go to the executors?

3 Answers | Asked in Estate Planning for Massachusetts on
Answered on May 17, 2017

An attorney should draft your Will and depending upon how complex your estate is, should not be too expensive. First of all, in MA we no longer use the term Executor, we use the term Personal Representative. Your estate only goes to your named beneficiaries, unless designated in percentages, the amount is split between the named beneficiaries equally. While a Personal Representative can be a beneficiary, the estate only goes to the named beneficiaries and if there are no beneficiaries or...
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Q: I'd like to buy a business in my town - should I buy it as a corporation?

3 Answers | Asked in Mergers & Acquisitions for Pennsylvania on
Answered on May 17, 2017

You should buy the assets of the business and limit your potential liability for any taxes or other obligations of the business you are acquiring. You should probably buy the business using a new LLC or Corporation. Contact a business attorney in your area for assistance.
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Q: I would like to buy a small business in my town - should I form a corporation to do that?

2 Answers | Asked in Mergers & Acquisitions for California on
Answered on May 12, 2017

I generally advise people who operate businesses to form a LLC or Corporation to limit any personal liability related to operating the business. It is not always necessary, but generally a good idea.
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Q: Equity Escrow works in M&A

1 Answer | Asked in Mergers & Acquisitions for Illinois on
Answered on May 11, 2017

First, hire a local experienced business attorney to assist you. This is a complex transaction and the terms of the deal need to be detailed closely.

If you are selling shares held by you or the companies treasury shares, then you need an independent escrow of the shares. If the company is a LLC or Sub-S corporation then there is an issue of the distribution of income or if a C-Corp the use of dividends as well. I would provide that a percentage of the distributions in cash to the...
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Q: If I bought a company last year and found out recently that the prior owner had left behind environmental contamination,

1 Answer | Asked in Mergers & Acquisitions for Michigan on
Answered on May 5, 2017

Did the owner disclose the existence of the contamination issue? Was he aware of it? If you own the property you are responsible, but can seek reimbursement from the prior owner especially if he caused or was aware of the contamination. I would contact an attorney in your area who is familiar with environmental law and has a corporate partner if possible to review your agreements and to determine the extent to which you can seek indemnity from the prior owner.
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Q: If you acquire a company are you required to honor all of the current owner's existing vendor contracts?

2 Answers | Asked in Mergers & Acquisitions for New Mexico on
Answered on May 5, 2017

If you buy the stock of a corporation (or membership interest if it is an LLC), then you take all its assets and obligations as of the time of purchase. If you buy the assets of a corporation you can choose what assets and liabilities/obligations you assume. The Agreement should specify what assets and obligations you are buying in an asset purchase and sale, if you are buying the corporation stock, then you are stuck with existing contracts.
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Q: I rent the downstairs of a house(finished basement)our signed rental agreement since nov 2015 states everthings include

1 Answer | Asked in Contracts and Landlord - Tenant for Massachusetts on
Answered on May 4, 2017

The short answer is that the rent has to be reasonable and he can ask to increase the rent once the lease you have expires. If there is no lease then he can ask to increase the rent upon 30 days notice. My first question however is the basement apartment in compliance with local requirements to rent out? Many people in Cambridge and Somerville have rented out illegal apartments in the past, which if an inspector or assessor comes to the home will create serious problems for both the landlord...
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Q: Raising capital for a DE LLC with a Y-Combinator SAFE. Do I file anything to ensure investors are protected by IRC 1244?

1 Answer | Asked in Business Formation, Business Law and Contracts for Massachusetts on
Answered on May 4, 2017

To The Code also imposes recordkeeping requirements on the corporation relative to its §1244 stock. Among these is requirement that the corporation designate designation, for its transitional year, those of its outstanding shares that qualify for small business stock treatment.

(b)Common stock. Only common stock, either voting or nonvoting, in a domestic corporation may qualify as section 1244 stock. For purposes of section 1244, neither securities of the corporation convertible into...
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Q: Is "property damage" a legal issue? A tow truck driver damaged my car.

3 Answers | Asked in Contracts, Car Accidents, Consumer Law and Small Claims for Massachusetts on
Answered on May 1, 2017

Subject to knowing more about the circumstances of the Tow, e.g. was it removed by the City for being illegally parked, assuming they were towing the car because you called them to tow it, you can sue them for damages. If it was illegally parked the grounds for seeking damages are slightly different depending upon the circumstances.

If you go to the Mass Trial Court Law Libraries, which is online, you can research the law for damages related to this matter. There is also a Trial...
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