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Saturday, March 19, 2016

Legal Checkup: "An ounce of prevention is worth a pound of cure"

“An ounce of prevention is worth a pound of cure.” - Benjamin Franklin
A company legal checkup is similar to one that you would have with your personal physician.  It’s evaluating the status of your business’s legal matters currently and prioritizing areas for improvement.
With a legal checkup, you’re conducting a high-level review of your business’s legal records.  Matters that may need to be addressed include: i) updating internal agreements such as shareholder agreements if one or more key shareholders have sold their interests in the prior year; ii) updating/modifying existing customer agreements to reflect most current terms of service (or frequently negotiated provisions); and iii) updating lease agreements. 
Following is an overview of key areas of your business for ongoing maintenance and areas that a buyer would likely ask to review (all should be included as part of your business’s legal checkup) in the event of a sale or merger:
A.   Corporate Organization:
 Background:
1.     Type of Entity:
2.     EIN:
2.     Articles of Incorporation (or if not a corporation, other organizational filing):
1.     Action by Majority Written Consent
2.     Board of Directors and Officers: Indemnification
3.     Amendment(s)
3.     By-Laws and Amendments
4.     Director and Shareholder Meetings/Actions
1.     Note missing meetings/minutes (Prepare "make-up" minutes)
2.     List and history of Officers and Directors
3.     Voting requirements/action by written consent
 B.   Capitalization and Records
1.     List of Owners (including each related company and subsidiary)
2.     Unit of ownership:
1.     Record of units issued (transfer ledger)
3.     Shareholder Rights
4.     Shareholder Agreements
5.     Voting Agreements
6.     Equity Financing
1.     Common Units
2.     Preferred Units (preferences)
7.     Debt Financing (e.g. line of credit, term loan, etc.)
 C.  Third Party and Customer Matters
1.     Service Agreements
2.     Purchase Order Agreements
3.     Consulting Agreements
4.     Sales Agreements
When representing buyers and sellers of businesses, the due diligence items listed above are almost universally requested for review, however another important and ongoing goal for the legal checkup is to end up having all of your legal records in a format where they are easily accessible by you and your professional advisors during regular operations.
Due to the fact that the legal records are so often required for due diligence, having those materials current will streamline any due diligence process and help avoid surprises.  Also, if companies do not have their records readily available and current, it can lead to reduced expectations on the Buyer’s part and may very well negatively impact the sales price, however clean up prior to a sale may be cost or time prohibitive, so ongoing maintenance is advisable. 
Why is a legal checkup important even if you’re not actively or planning to sell your business?
  • Your business may find documents or agreements that need to be updated or modified (shareholder documents, customer agreements, leases and other areas often change over time, either because of changed business circumstance or changes in the legal environment) to help avoid potential risks;
  • Searching for missing/incomplete records can be time consuming and wasteful of your resources; and
  • Complete corporate and sales records are ‘good housekeeping’ for all of your future management activities and helps ensure quality information for planning decisions.

Ready to get your ‘legal house’ in order?  Call me and let’s discuss how we can help you do so.  The ‘ounce of prevention’ approach will save your business time and money. 
DISCLAIMER: None of the foregoing items from the list should be deemed exhaustive, nor should this post be construed as legal advice.  Consult a local attorney to evaluate your specific situation. 

Tuesday, September 22, 2015

Waiting for Carnival...

Cruise Ship Speculation Continues (AL.com - link)

..."Cruise fanatics, businesses and city leaders have been waiting on more details ever since Mobile Mayor Sandy Stimpson said on Sept. 3 that a cruise ship is returning to the vacated terminal for the first time in four years.
Celebrations have been on hold while the administration's legal team works to finalize an agreement with Miami-based Carnival Cruise Line. The agreement is expected to be finalized this week, according to Stimpson spokesman George Talbot. 
The City Council, which is expecting the final agreement before the end of the month, wants to take some more immediate action. On Tuesday's agenda is an item to rename the cruise terminal on Mobile's waterfront."...

Having taken a few of the Mobile cruises, which were a lot of fun, I am really glad the city and Carnival have gotten this deal worked back out.  The loss of the cruise ship was a big blow to Mobile tourism and with the recent sudden cancellation of Bayfest it is more important than ever for Mobile to have a replacement tourist activity.

Monday, February 17, 2014

Startup Bills in the Alabama Legislature

"Alabama Senate moves to help small businesses raise startup money through crowd funding:
MONTGOMERY (AP) — The Alabama Senate is trying to give people a new way to raise money to start small businesses.
Arthur OrrEnlarge |Arthur Orr
FILE -- In this photo taken Feb. 4, 2013, State Sen. Arthur Orr, R-Decatur, talks with reporters in Montgomery, Ala. Alabamians trying to start small businesses in a tough credit market may soon have a new method that will allow them to raise small amounts of capital from many Alabama investors. Known as “crowd funding,” the process has been used for years to generate money for political campaigns, artistic projects and charities. It will become a legal way to raise capital for small businesses in Alabama if the Legislature approves a bill in the next session starting Jan. 14. Orr, the bill's sponsor, said the Alabama Securities Commission asked him to introduce the bill because small business people need a different way to raise money. “It's difficult for start-ups to get bank loans and other traditional financing,” he said. (AP Photo/Phillip Rawls, file)
APThe Senate voted 31-0 Thursday for a "crowd funding" bill sponsored by Republican Sen. Arthur Orr of Decatur.
The legislation is backed by the Alabama Securities Commission. It would allow someone trying to start a small business in Alabama to use social media and advertising to find small investors who live in the state. It is limited to raising $1 million, and it is restricted to Alabama businesses and investors because of federal regulations.
The proposed legislation is an option for people trying to start small businesses in a tough credit market, Orr said.
His bill now goes to the House for consideration. House Speaker Mike Hubbard, R-Auburn, said Thursday he favors the bill because Alabama needs innovative ways to give small businesses access to capital. But he said he has not had a chance to gauge support in the House."

(link) http://www.tuscaloosanews.com/article/20140123/NEWS/140129867

OPINION:

This is one of two bills I know of that could help startups.  The other has been pushed along for a couple of years and would provide an investment tax credit for investments in small/startup enterprises.

I, for one, hope both can pass this year.

Monday, February 18, 2013

IndieCandy - All Natural Allergen Free Candy

IndieCandy - All Natural Allergen Free Candy (www.indiecandy.com)

Favorite - Dark Chocolate truffle....Mmmm

"Dark chocolate center draped in dark chocolate.   A perfect little addition to a stocking, gift basket or hostess gift.    These are vegan and dairy free truffles,... but shhhh,  no one will know that by taste. These are some of the richest truffles you will ever eat. 2 truffles per gift box."

#itsawesome

Monday, February 4, 2013

2 local businesses chosen to compete for grant | TuscaloosaNews.com #Zambooki.com

2 local businesses chosen to compete for grant | TuscaloosaNews.com:


"Two Tuscaloosa companies are among 13 start-up companies that have been selected for the 2013 Alabama Launchpad Start-Up Competition.
The companies are Thrupore Technologies, a nanotechnology start-up that provides superior catalysts for chemical manufacturers based on advanced materials science, and Zambooki (www.Zambooki.com), an Internet and Web service company that helps individuals and businesses find contractors for various projects..." (Click Link to see complete article)

--Staff report

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