Business Law

by John T. Prahl

Many of my oldest clients are business people.  This is so because the owner of a business is likely to run across many areas where a lawyer can help.  (Business owners usually have a wide-range of  needs that require a lawyer.) Questions such as what type of entity should a business be and the relationship between multiple owners are as important as what should the business do and where should it be located.  

An experienced business attorney can advise on the pros and cons of the different business entities, such as corporations, limited liability companies and various partnerships.  He can also help define in a written document the responsibilities and expectations of multiple owners in the event of a disagreement or death before a crises arises and one party seeks an unfair advantage or behaves in a less than reasonable manner.

How these issues are resolved can have tax consequences, both during the existence of the business and when it is sold or passed on to heirs.  An attorney, along with a good CPA, is invaluable to any person starting, acquiring or selling a business. 

Many businesses are not “started”, but purchased or sold as a going concern (operation).  Many aspects of a business are difficult for an outsider to fully understand.  The right contract, by asking the right questions, can help as can other types of investigation or “due diligence”.

Depending on the size and type, a business may have owned or leased real property, machinery, vehicles, inventory, valuable processes or client lists, essential non-owner employees, trademarks, trade names, patents, binding franchise or other contracts, non-contractual or contractual obligations to creditors, suppliers, employees or customers.  Each of these categories can in turn take many forms.  It takes experience to know when a business is really simple and when it only appears to be so. 

A seller of a business wants to be released from all past or future obligations and receive the contracted for payment.  If payment is to be made over time, the seller wants to be sure that payment is secured and there is as small a chance as possible that the buyer will destroy the business before the seller is paid. Once again taxes influence how and when payments are made.  Buyers and sellers typically have sharply differing interest in this regard.

While a business is in operation any number of issues can arise, which may be positive or negative.  It is very important to get that big new contract right.  Certain issues such as publically traded securities, patents and trademarks or collective bargaining agreements undoubtedly require specialists, but for the closely-held business an experienced business lawyer can cover a wide variety of legal issues.

In over twenty-four years of practice, concentrating in the business area, I have been asked to work on a wide variety of contracts and transactions, from employment to real property, to construction, to franchises to electric power purchase and supply agreements.  One can never say, “I’ve seen it all”, but I can say I have seen a great deal. Let me put that experience to work for you as you start, acquire, run or sell your closely held business.   

 

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