EQUINOX Business Law Group - Seattle Bellevue

Getting the Business Acquisition Deal Done

April 30, 2009

I attended a great program entitled "Getting the Deal Done" yesterday hosted by John Martinka of Partner On Call with a focus on closing business purchase/sale transactions in a down economy. The program included input from an accountant, attorney and banker plus John, as a consultant who works with individuals/companies looking to acquire a business. I have seen two transactions fail to close after much investment by both parties so I was very interested in the topic. Some key points of value I wanted to share:

1) Selling a business is not like selling a house. With a home sale, just before listing the house, the owners spent time and effort sprucing it up and then invite the world in to see it. With the sale of a business, the seller *should* prepare for the sale 3-5 years in advance, not at the point where they are ready to sell. Also, sales of businesses are often quietly positioned, not advertised for the world to see.

2) Seller financing. In this market, Sellers must be willing to finance part of the transaction. Seller's need to be very careful to protect their interests with collateral (stock or assets of teh company) and/or personal guarantees by the buyers.

3) Letters of Intent. Most carefully drafted LOIs are non-binding but buyers must be very careful in how they draft and present them. Generally, certain terms such as confidentiality and indemnification are binding despite the fact that the buyer or seller can exit the transaction without penalty. It must be clear that the closing is contingent on a definitive purchase and sale agreement executed by the parties.

4) Most errors in purchase and sale transactions are "errors of omission." Sellers either do not have their documents in order to present a solid package to prospective buyers. Buyers fail to perform adequate due diligence prior to purchasing. Both limit the potential success of the transaction.

5) Relationships rule. A major element in successful purchase and sale transactions is a solid relationship between buyer and seller. The trust factor really does play into whether or not the deal will close.

The insights of the panel offered valuable advice for advising business owners on all aspects of purchase and sale transactions.

Manfuacturing Skills Needed by Businesses

April 28, 2009

I attended the Center for Manufacturing Puget Sound's business roundtable last week. Part of the discussion focused on how only 15% of US jobs are management yet most hands-on programs in secondary schools have been eliminated and most kids are encouraged to attend college to achieve white-collar positions - which are extremely limited. The manufacturers were clear that workers with a college degree were indeed valuable but even the college educated workers needed some skills because that's what the employers need. Many kids are not exposed to manufacturing opportunities yet there is demand in very specialized functions of manufacturing that provide a very good living. Shop classes, automotive repair classes, and other hands on classes provide exposure to how mechanics function and how they work in business. Just exposing them to a show like "How It's Made" on the Science Channel provides great insights that might trigger an interest area otherwise not revealed. Robotics competitions are another way to promote these skills in high school students - See the Wall Street Journal Article "Building a Better Robot."

Building Value into Your Business

April 16, 2009

Most business owners start out with a vision of success but not always a plan for exit. An exit strategy lays out how the owners will exit he business and how they will "cash out." This implies that a business should have value of its own outside of its owners -- and it absolutely should. Sometimes that value is the process of providing the goods and services, other times it's the goods or services themselves or the customers, name and goodwill are the core value of the company and in many cases, it's a combination of all three. Regardless of where the core value of your business resides, it is important that you plan how you will develop and grow that value so that it can be transferred to a buyer or other third party upon you leaving the business. Value in business can only exist if it can hold its own without the owner being present. It is built and developed through relationships with key vendors, strong branding, and creation and protection of intellectual property. To create and protect this value, you must be proactive in looking at how contracts are drafted, how employees are incented, and how intellectual property is managed, licensed, and protected. Don't wait until you're close to exit to think through these things... be proactive and intentional about growing the value of your business through smart business decisions.

Brand Presence and Protection in Social Media

April 09, 2009

As I become more fully engaged with my social media activities for SBLS and the restaurant, I have also become more aware of how they can impact brands. I have run across a couple of companies whose sole purpose is to monitor how your brand is being talked about and perceived on the internet and, more specifically, in social media. These services are valuable in helping you to leverage (and influence) the social media networks to build and manage the brand presence by promoting its style and benefits to targeted and specific audiences.

There are a couple of very important legal aspects to managing your brand online, especially if you're using an outside service provider to help you do so. Many companies have been burned by hiring third parties to blog, tweet, or otherwise post on their behalf. It's critical that your online presence be authentic and it's not authentic to hire someone to act on your behalf on the web because you can't be bothered to do so. You may not end up in legal trouble, but the bad PR will have a huge impact. Also, remember that if you want protection for your brand, it is your job to police its use and defend it in the marketplace. Social media sites almost universally have "search" functions that allow you to search for your name or your business' name. If you find someone pretending to look like you or otherwise infringing your brand, you must take action. Otherwise, your brand identity may be diluted and, more importantly, you will lose your right to exclusive use of the brand.

Some user-friendly tools to help you monitor and manage your name and brand online include Google Alerts, web searches, and Trackur.

New I-9 Form

April 04, 2009

The US Citizenship and Immigration Service has submitted an interim final rule that requires a new I-9 form to be used effective April 3, 2009. The revised I-9 form must be used for new hires and employers must verify that they have fully complied with the new I-9 form document requirements for employees whose employment authorization expires after April 3, 2009. The most substantial changes to the rule are: 1) that all documents must be unexpired and 2) modifications to the List A documents. Click here for the new I-9 form.