Business owners face a staggering number of complex and diverse issues. Legal, business, and personal considerations often intersect.
That's why I begin by understanding my client's business and short-, medium-, and long-term goals, opportunities, challenges, and risks. This illuminates factors that are most significant for the client. It also enables me to knowledgeably advise on key decisions and focus my representation on what is most important to the client.
SALE OR ACQUISITION OF A BUSINESS
The sale or acquisition of a business is a benchmark event. The economic outcome will largely depend on factors such as the:
Legal and tax structure of the transaction;
State of M&A market;
Degree to which the business is prepared for transfer;
State of the industry;
Whether a strategic buyer who is willing to pay a premium for the business can be identified.
I counsel my clients to help them fully understand the legal, business, and interpersonal dynamics of the transaction, then collaborate with other advisors to develop the right deal structure. Managing the sale or purchase of a business can be like operating a piece of sophisticated machinery. I know when to use a wrench and when to simply add oil to keep the transaction moving in the desired direction.
AGREEMENTS FOR AND RELATING TO PERSONAL SERVICES
When helping a business owner negotiate terms of employment for a key employee, I focus the client on strategies designed to motivate and retain the individual, as well as to protect the company's trade secrets and confidential information. Incentives are structured to reward the employe if specified milestones are achieved. In addition, the employee's right to receive all or part of the incentive can be contingent on their remaining with the company for a specified period. Such incentives may include bonuses, deferred compensation, stock appreciation rights, phantom stock and stay bonus plans.
I draft agreements that prohibit current and departed employees from disclosing trade secrets or other confidential information or from soliciting the company's customers or employes. Knowing that courts are often reluctant to enforce restrictive agreements with former employees, I counsel clients that the constraints imposed by such agreements should be reasonably necessary to protect their legitimate business interests without unduly preventing the ex-employee from earning a living. In addition, such agreements may stipulate that a former employee who is in violation will forfeit post-employment payments of non-qualified deferred compensation or other incentives.
ENTITY FORMATION AND AGREEMENTS AMONG OWNERS
Most of us have experienced the uncertainty of choosing an entrée and side dishes from an extensive restaurant menu. Choosing the best legal entity for a business presents a similar dilemma. On this menu, however, the "entrées" are called sole proprietorship, partnership, limited partnership, corporation (which can be "C" or subchapter S), and limited liability company ("LLC"). The side dishes are their accompanying characteristics: limited liability, flow-through taxation, governance, and flexibility. The LLC and the Subchapter S corporation are the usual finalists in the decision-making process, with the LLC being today's "gold standard."
I work with owners, and often with their CPAs, to recommend the entity that offers the blend of liability protection, taxation, management and operational flexibility best fitting their needs. When the decision has been made, I handle the details and draft the documents necessary to form the entity and structure it to operate the business.
I also draft co-owner agreements, such as LLC operating agreements, shareholder agreements, and partnership agreements. Such agreements can define the owners' financial relationship, such as the percentage and type of equity interest (e.g., voting or non-voting); define majority and minority owners' rights; indicate whether additional capital contributions can be required; list restrictions on transfer of ownership; and protect the owners, their families, and the company should an owner die or be disabled.