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Mergers & Acquisitions Questions & Answers
Q: What type of corporate entity should I choose for my business to attract a buyout by an investor?
Jonathan R. Roth's answer
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...
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...
Q: If someone has expressed interest in buying my company should I have them sign an NDA before we talk specifics?
Donovan A Rodriques' answer
In order to guard the proprietary information of the business, it is generally best practice to enter into a NDA before you begin to disclose specifics. Make sure to consult with a mergers and acquisitions lawyer regarding the specific considerations when negotiating an NDA.
In order to guard the proprietary information of the business, it is generally best practice to enter into a NDA before you begin to disclose specifics. Make sure to consult with a mergers and acquisitions lawyer regarding the specific considerations when negotiating an NDA.
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
Answered on Jun 14, 2017
Andy Wayne Williamson's answer
I suggest that you hire a business attorney to work with you through this process and get specific one on one advice face to face. This is a large goal that you have which is great but you need to get an attorney on board now and build the structure as you go forward.
I suggest that you hire a business attorney to work with you through this process and get specific one on one advice face to face. This is a large goal that you have which is great but you need to get an attorney on board now and build the structure as you go forward.
Q: When is the best time to sell a business?
Jonathan R. Roth's answer
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...
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...
Q: If I missed court in Columbus county for I citation for driving without a license and paraphernalia. How can I fix it ?
1 Answer
| Asked
in
Civil Litigation, Gov & Administrative Law, Mergers & Acquisitions and Traffic Tickets
for
North Carolina
on
Answered on Jun 5, 2017
Answered on Jun 5, 2017
Q: What are the advantages of a stock sale over an asset sale?
Jonathan R. Roth's answer
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...
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...
Q: If a larger entity buys out the company I work for, can they change employee benefits?
Jonathan R. Roth's answer
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...
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...
Q: Would a UCC search on an entity show me all liens, warrants, and the like available in public records for that entity?
Jonathan R. Roth's answer
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...
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...
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
Answered on May 23, 2017
Jonathan R. Roth's answer
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...
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...
Q: I'd like to buy a business in my town - should I buy it as a corporation?
Nancy L Lanard's answer
You should buy only the assets of the business, not the stock or membership interest of the entity that currently owns the business. Most like you should form your own entity - either a corporation or limited liability company to own the business. You should consult with an attorney to advise you. Depending on the type of business, it is likely you will want to own the business as a corporation or LLC.
You should buy only the assets of the business, not the stock or membership interest of the entity that currently owns the business. Most like you should form your own entity - either a corporation or limited liability company to own the business. You should consult with an attorney to advise you. Depending on the type of business, it is likely you will want to own the business as a corporation or LLC.
Q: I would like to buy a small business in my town - should I form a corporation to do that?
Jonathan R. Roth's answer
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.
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.
Q: Equity Escrow works in M&A
Jonathan R. Roth's answer
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...
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...
Q: If I bought a company last year and found out recently that the prior owner had left behind environmental contamination,
Jonathan R. Roth's answer
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.
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.
Q: If you acquire a company are you required to honor all of the current owner's existing vendor contracts?
Gary William Boyle's answer
If you buy the stock of the company, the vendor contracts will continue to be contracts of the company you purchased and will be in force according to their terms. If you buy the assets of the company, the vendor contracts will remain with the seller and you would be free to deal with vendors as you please. Of course, there are many other considerations to take into account when deciding whether to purchase stock or assets.
If you buy the stock of the company, the vendor contracts will continue to be contracts of the company you purchased and will be in force according to their terms. If you buy the assets of the company, the vendor contracts will remain with the seller and you would be free to deal with vendors as you please. Of course, there are many other considerations to take into account when deciding whether to purchase stock or assets.
Q: If you acquire a company do you have any obligation to retain their independent contractors?
Jonathan R. Roth's answer
If you purchase the stock of a company you are obligated to honor existing contracts. If you buy the assets of the company you can purchase the assets and limit the obligations and contracts you accept in the purchase. If the independent contractors have contracts, you have to honor those contracts. If they have termination provisions, then you or the current owner of the company can terminate them. I would have the independent contractors terminated and a release obtained by the Company...
If you purchase the stock of a company you are obligated to honor existing contracts. If you buy the assets of the company you can purchase the assets and limit the obligations and contracts you accept in the purchase. If the independent contractors have contracts, you have to honor those contracts. If they have termination provisions, then you or the current owner of the company can terminate them. I would have the independent contractors terminated and a release obtained by the Company...
Q: I signed a covenant not to compete, but I was laid off due to a company buy-back. Is it still enforceable?
2 Answers
| Asked
in
Contracts, Mergers & Acquisitions and Employment Law
for
New York
on
Answered on Apr 27, 2017
Answered on Apr 27, 2017
Ali Ebrahimzadeh, Esq.'s answer
Many non-compete clauses are invalidated because they're too broad. Have a lawyer look at it.
See: http://www.aeesq.com/business-law/employment-lawyer/
More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC...
Many non-compete clauses are invalidated because they're too broad. Have a lawyer look at it.
See: http://www.aeesq.com/business-law/employment-lawyer/
More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC...
Q: If companies that are based in different states merge, how do you decide which state's law should apply to the merger?
Jonathan R. Roth's answer
The merger agreement dictates which state laws apply. As to that decision it depends if it is a merger of equals or one is entity will remain in control. The decision should be based on what is best for the merged entity.
The merger agreement dictates which state laws apply. As to that decision it depends if it is a merger of equals or one is entity will remain in control. The decision should be based on what is best for the merged entity.
Q: When two companies merge, do employees get to keep their existing benefits?
Ali Ebrahimzadeh, Esq.'s answer
Any contractual obligations of either employer should be upheld, despite any merger.
See: http://www.aeesq.com/business-law/employment-lawyer/
More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC in the...
Any contractual obligations of either employer should be upheld, despite any merger.
See: http://www.aeesq.com/business-law/employment-lawyer/
More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC in the...
Q: What is the best way to handle employee questions before an acquisition?
Jonathan R. Roth's answer
There are a variety of ways to handle the information depending upon whether there will be lay-offs or not. If some people are going to lose their jobs, then you need to prepare yourself and them for that event. If no one is being fired or laid-off, then the matter is much easier.
However to give a better response it would be helpful to know how many employees and locations are involved. Before the Merger key employees will need to know such as your CFO and people who will be...
There are a variety of ways to handle the information depending upon whether there will be lay-offs or not. If some people are going to lose their jobs, then you need to prepare yourself and them for that event. If no one is being fired or laid-off, then the matter is much easier.
However to give a better response it would be helpful to know how many employees and locations are involved. Before the Merger key employees will need to know such as your CFO and people who will be...
Q: What sorts of costs are usually associated with buying a company?
Ali Ebrahimzadeh, Esq.'s answer
This varies wildly based on the type of company. Your question is too vague. More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and...
This varies wildly based on the type of company. Your question is too vague. More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and...
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