Business Transactions

The vast majority of business transactions taking place every day do not require the services of an attorney. If they did, the business world would quickly grind to a halt.

Lawyers are neither needed nor consulted on most every-day matters, such as business strategy, marketing, evaluation of competition, market share, market position, financing, cash flow projections, business location, web site design, etc.

On the other hand, in many situations, good legal advice can provide insurance against costly misunderstandings or mis-steps.

Here are some of the areas where an experienced business attorney can help you stay on the right track.

Structuring Legal entities*

  • Limited liability companies
  • Partnerships
  • Limited partnerships
  • Sole proprietor

Contracts

  • Joint ventures
  • Loan and financing agreements
  • Buy/sell agreements
  • Leases
  • Confidentiality agreements
  • Non-compete agreements
  • Development agreements
  • Shareholder agreements

Acquiring and selling a business

  • Asset Purchase Agreements
    • Assets being transferred
    • Disposition of assets not being transferred
    • Liabilities assumed
    • Liabilities disclaimed
    • Tradenames, phone numbers, etc
  • Due diligence
  • Bulk Sales laws
  • Vender and customer relations
  • Continuing contracts and relationships
  • Encumbrances
  • Assumptions and disclaimers of liability
  • Non-disclosure agreements
  • Non-solicitation agreements
  • Lease restrictions
  • Restrictive covenants
  • Licenses and permits
  • Obligations to Employees
  • Environmental contamination
  • Zoning
  • Asset protection
  • Labor and employment agreements

Financing

  • Loan agreements
  • Personal guarantees
  • Performance requirements
  • Loan terms
  • Security Agreements
  • Indebtedness restrictions
  • Equity requirements and contributions

What happens if an owner or manager resigns, withdraws or dies?

*Here is a summary of the basic distinctions among the most common business entities and their advantages and disadvantages:

Sole Proprietorship

Advantage: Simple to form, no organizational expense, no extra tax forms or reports.

Disadvantage: personal liability, easy to mix personal and business affairs.

General Partnership

Advantage: Strength in numbers, sharing of strengths, expertise and assets.

Disadvantage: Each partner is liable for the actions of the other, issues of control and continuity have to be addressed. What if you don’t get along? What if one dies, retires or becomes disabled?

Limited Partnership/Limited Liability Partnership

Advantage: Capital contributions from limited partners who have no liability for operation of the business.

Disadvantage: High startup costs, need for extensive partnership agreement

Corporation

Advantage: Protection against liability, capital contributions from shareholders

Disadvantage: Need for corporate documents, annual meetings, scrupulous record keeping, separate tax returns, more accounting expenses, two levels of taxation (except for “S” corporations”)

Limited Liability Company

Advantage: Liability protection and single level of taxation (like a partnership)

Disadvantage: May be treated too casually.

Questions to be addressed before deciding on the proper business entity:

Who will be the owners?

How much money will be needed, and will it come from lenders or investors?

Who (if anyone) will be personally liable for the company’s obligations?

Will the owners be passive investors or active managers?

Who will make which management decisions?

Who can hire, fire, sign contracts, borrow money, sell the company?

What capital contributions will be required initially?

What if more funds are needed in the future?

Will the investors be required to pay more into the company? Who decides? What if they can’t pay more?

How much debt will be required? Who are likely lenders? What assets will secure the loan? Who is willing to be a guarantor?

How are profits and losses to be allocated?

How are the proceeds of a sale or dissolution of the company to be distributed?