Balancing Business and Law Blog

Growing Your Business w/ the Right People

December 10, 2008

Today I attended a facilitated program with about 30 mid-size business owners where we discussed the key takeaways from the business books "Good to Great" and "Made to Stick." We spent quite some time on the importance of having "the right people on the bus." "Good to Great" emphasizes "First the Who, then the What," meaning that hiring the right people comes before the creation of the vision/programs. This concept was counter-intuitive to a lot of people: "How do I know who to hire if I don't know what I'm hiring them for?" Yet it makes sense to bring on people who complement your skills and help you to create a more robust and complete vision. When hiring people is not appropriate for your business, an advisory board comprised of the right people will do the trick. Other people-related takeaways: 1) The right people don't have to be motivated; 2) The right person can do the job of 2-3 people; 3) use psychological job testing when hiring and don't second guess the test results - they are always right; and 4) when in doubt, don't hire. I have seen BizBooks groups popping up around and today found that I got so much more out of the book through the group discussion.

Private Placements Defined

December 03, 2008

I was recently asked, "I noticed that you handle 'private placements' - what does that mean?" A "private placement" is a sale of securities (stock or membership interest) that is not a public offering. In order to sell securities, a company must register the securities with the Securities and Exchange Commission (SEC) unless the sale of the securities meets an exemption under the 1933 or 1934 Securities Acts. An exemption allows for the sale without registration with the SEC but requires that the individuals or companies purchasing the securities are "accredited." To be an "accredited investor," the person/company purchasing the interest must have a certain level of net worth or income and must be sophisticated in business and financial transactions. Various exemptions exist under the Acts and they limit the amount of money that can be raised and the number of unaccredited investors allowed in a particular offering. If you are selling or exchanging an interest in your company for cash to a passive investor, you are likely performing a private placement of securities and need to be certain you are complying with both Federal and State securities laws. As a baseline, you need to issue a Private Placement Memorandum outlining the investment and its risks and have the investor complete an Investor Questionnaire and Subscription Agreement. These documents are highly complex and it is critical that they be done correctly for your transaction.

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