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Lay It All On The Table When Selling a Business

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Sales & Dissolutions on Monday, March 21, 2016.

Businesses change hands all the time in California and throughout the nation. Typically, every company owner’s reasons for selling a business are unique to an individual situation. Various legal challenges may arise in the course of such transactions that are best dealt with alongside experienced guidance.

Business owners are advised to “lay it all on the table” when discussing deals with potential buyers. Otherwise known as “full disclosure,” it is often best to be upfront in terms of any troubling issues that may affect a prospective buyer’s decision. Being honest regarding any flaws that exist within a business provides the clarity a potential new owner needs to make informed choices.

Some experts say that being transparent and sharing the bad along with the good helps build trust and credibility that can boost negotiations. Consequently, trying to conceal negative business details may actually backfire and prevent a deal from taking place at all should a buyer learn that a current owner was less than forthright when providing information. Details about inventory backlog, financial crises or any number of other important issues may impact a potential buyer’s decision.

Depending on the size of a California company and various other issues involved in selling a business, an owner or potential buyer may find it helpful to seek assistance from a business and commercial law attorney before negotiating a deal. An experienced lawyer can help make certain that the client clearly understand the legal terms and obligations included in a business sale contract. Allowing an attorney to act on one’s behalf often ensures that one’s business interests are protected and all available options are explored to accomplish immediate and long-term business goals.

Source: postcrescent.com, “Go ugly early when selling a business“, Scott Bushkie, March 12, 2016

backlog, business sale, inventory, Sales & Dissolutions, transparency

Resolving Contract Dispute Issues in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Contract Disputes on Wednesday, February 10, 2016.

When company owners or their representatives sign agreements with other parties, they are binding themselves to certain responsibilities and obligations contained therein. Contracts are par for the course in business and are typically customizable to suit the needs and goals of those who add their signatures to the agreements. When a contract dispute arises, however, a California company owner may experience immediate adverse effects in a variety of areas that can threaten the very existence of his or her business.

Knowing where to go for legal help to resolve contract issues may be key to obtaining a swift and fair resolution to the problem. The Law Office of Lynnette Ariathurai, A Professional Corporation, serves clients in Fremont and surrounding regions. Our seasoned attorneys have dedicated themselves to helping company owners protect their legal interests and achieve both their short-term and long-term business goals.

It is important that all signatories possess a clear understanding of the legal terms and wording in a contract in order to make certain that everyone involved is aware of their individual obligations. Whether the issues you now face pertain to an independent contractor agreement, technology licenses or nondisclosure issues, we are prepared to help you address the matter. If basic negotiation and mediation is not enough to resolve the situation, we are ready to aggressively litigate the issue on your behalf.

The Law Office of Lynnette Ariathurai, A Professional Corporation, brings keen insight and decades of experience to the table that may increase your chances of obtaining a favorable outcome in court. We can anticipate possible issues that may arise during litigation of your contract dispute and offer guidance as to how address those issues in a way that helps you achieve your business goals. Our California practice is focused on helping you overcome your legal challenges and accomplish your business objectives in a timely manner at minimal cost.

contract attorney, Contract Disputes

Proper Business Planning May Bring Quicker Success

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporationposted in Business Formation & Planning on Thursday, February 4, 2016.

In 1988, two California brothers took a road trip to get inspiration for what to do with their lives. This trip led to them starting an enterprise selling T-shirts. It is not uncommon for young people to start off their careers buying and selling merchandise, but in many cases, no business planning is involved at the onset. The two young men, ages 20 and 23, started with limited funds and purchased a van to travel to different college campuses to sell their merchandise. They say that they failed a thousand times and struggled to make enough money to support themselves from month to month.

Their persistence helped them to persevere until 1994, when, with only $78 in their business account, they came up with the idea to print a positive message on their T-shirts. Their Life is Good line of merchandise was launched, and they say that was the start of their success. They continued their marketing from the van, but the results were disappointing. This was until a small shop bought 24 T-shirts, and sold them all within 14 days. Their sales totaled $87,000 by the end of that year.

They hired their first employee the next year and sold $262,000 in merchandise by the end of that year. They also moved their office from the van to an old shipping container in 1997 and recorded $1 million in sales at the end of that year. Through continued success, Life is Good now has an extensive range of merchandise that is available in 4,500 stores. They have approximately 160 employees, and their sales turnover has reached $100 million. The brothers donate 10 percent of the company’s annual profits to charities that help improve the lives of children.

Although these California brothers have built a successful business over about 28 years, only their determination carried them through the first nine years until their sales reached $1 million. The valuable advice of an experienced business attorney may help to get new enterprises on the track to success much quicker through effective business planning. Building such a relationship with a lawyer from the start may avoid many of the pitfalls that may be encountered as the business grows even more successful.

Source: businessinsider.com, “The fascinating story of how 2 brothers went from running a failing business out of a van to building a $100 million company“, Natalie Walters, Feb. 3, 2016

business attorney, Business Formation & Planning, life is good, sales growth

Legal Guidance in Business Startups May Lead to Future Profits

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Friday, January 22, 2016.

Starting up a new business in California is an exciting time for any entrepreneur. It is not uncommon for excitement about potential success to prevent new business owners from considering the legal aspects of a business startup. One of the first decisions to make involves the type of business entity that will be formed. Will it be a sole proprietorship or a partnership? There are advantages and disadvantages presented by both.

Choosing a business partner is a process that requires careful consideration. It has been suggested that disputes between business partners are one of the most regularly cited reasons for new businesses to fall apart. A partner in a well-known and successful consumer company said business partners must be able to work together on multiple levels of business, and mutual trust is vital. He also said he would not recommend starting a business with someone who you would not trust to access your bank account.

In any successful business partnership, there will be the need to have someone to consult when legal issues arise. When important decisions have to be made that will not only impact on the new business but also on the business’s long-term success, the advice and guidance of an experienced business law attorney can be beneficial. A lawyer who is prepared to become familiar with the business and its operations can provide valuable input in any circumstances.

A California attorney can provide guidance and support for the idea of a business startup and all the choices that need to be made early in the process through the ultimate decisions concerning the corporate form that will be best for the company. Along with other legal matters, a lawyer will explain responsibilities regarding personal liability and other factors. such as tax considerations. Knowing that the legal side of the business is properly covered by an experienced attorney can leave a sole proprietor or business partners to look after the daily operations that will provide the profits.

Source: entrepreneur.com, “Before Starting a Company With a Partner, Ask Yourself This Question“, Laura Entis, Jan. 20, 2016

Business Formation & Planning, business partners, business planning, startups

Handling the Potential Complications of a Contract Dispute

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Contract Disputes on Thursday, December 24, 2015.

California business owners know the importance of contracts. Far from just being “pieces of paper,” contracts address business’s ownership, management, services and a host of other issues. Those doing business in the state will want to be prepared for the potential complications that can arise should a contract dispute interrupt productivity.

Every contract creates obligations for those who sign it. Business owners typically want to minimize liability and avoid litigation. Sometimes, however, challenges arise due to a disagreement about the information a contract may contain. It may seem impossible to resolve without legal intervention.

The Law Office of Lynnette Ariathurai, A Professional Corporation, is dedicated to helping clients create contracts that protect their legal and business interests. Every company’s needs are different, and each contract should reflect the unique factors of the company entering the agreement, using clear and simple language that explains each party’s obligations and responsibilities. Our experienced attorneys have offered guidance with regard to many types of contract disputes and are able to assess a situation to help determine the best way to resolve the issues at hand.

Your business issues are our priority, and we are committed to helping you accomplish your objectives in a personalized and cost-effective manner. You can contact The Law Office of Lynnette Ariathurai, A Professional Corporation, by using the form available on our website or calling our Fremont, California office to schedule a consultation. Whether you need assistance in drafting an agreement or reviewing a contract dispute, our business and commercial law attorneys are prepared to act on your behalf to achieve your goals.

contract complications, Contract Disputes, legal guidance

Quick Tips Before Signing a Contract

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Wednesday, December 16, 2015.

A business contract isn’t just a piece of paper. It’s a document that explains who you are doing business with, what type of business will be conducted and much more.

What is the person’s reputation in the industry? How has the business dealt with past deals? What is their reputation?

Consider the following factors before you sign an agreement:

Read the full agreement. This seems simple. However, all too often individuals sign agreements without reading the terms and conditions. If there is language that seems subjective or unclear, have an attorney review it with you and suggest amendments.
Know who’s involved in the contract. Who does the contract include? What parties will be held liable if there is breach of contract? Be sure the contract clearly identifies all parties.
Be aware of the length of the agreement and how it affects business. Make sure the actual length of the contract is clearly identified within the contract. If the contract is going to be renewed, how will that be handled? If the terms for the length of the contract are unclear, you can have an attorney assist you in making that language clearer.
Know your rights. Know what you are entitled to under the contract and what you are required to deliver. What happens if something goes awry? An attorney can draft terms in a contract to protect you from risks of liability and help you get what you bargained for from the deal.

While you may not consider working with a lawyer for drafting and signing a simple contract, the reality is that a lawyer can help save costs for disputes that could arise in the future. The time and money you spend, upfront, can ultimately be much more cost-effective. Consider how legal contract representation could benefit your situation.

Business Law, Contracts, tips on contracts

Avoid a Contract Dispute Through Drafting a Watertight Agreement

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Contract Disputes on Thursday, September 17, 2015.

Before embarking on a construction project, having a well-drafted construction contract is vital. There are numerous variables that will have to be addressed to protect a California contractor. Financing, escalation of material prices, dealings with local governments, potential defects and more can have significant financial consequences for the ultimate success of the project and even lead to a contract dispute.

The guidance of an experienced construction contract attorney can be invaluable in drafting the contract and in providing advice with regard to the preparation of the project prior to drafting a contract. The purpose of a construction contract is to assign the rights of each party, as well as delineating responsibilities and duties. A well-drafted agreement can reduce risks of misunderstandings and may prevent expensive litigation at a later date.

The various parties in the contract must be clearly specified, and the scope and pricing of the project must be noted. Furthermore, timelines must be stipulated, along with payments and the retainage portions of payments. If a loan or another type of financing is involved, the details must also be spelled out in the contract.

Regardless of the relationship between the contracting parties, verbal agreements — even covering one small detail — can be detrimental and could even jeopardize the project. There are many additional issues to address to avoid a contract dispute, and the complexity varies according to the scope of the project. California contractors may find comfort in knowing that the services of attorneys who focus on the prudent planning and drafting of construction contracts are available to assist in pursuing the completion of profitable contracts.

Source: msbusiness.com, “COMMERCIAL FINANCE 701 — Construction contracts and risk mitigation“, Sept. 10, 2015

Contract Disputes

Checklist for Business Dissolution Can Help Ease the Process

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Sales & Dissolutions on Thursday, December 4, 2014.

When a company owner decides — for whatever the reason — it is time to close up shop, something that seems should be such a simple process can actually be quite complex. Certain guidelines for business dissolution may apply, and those that do must be followed to ensure a smooth completion of the process. Creating a checklist of all procedures that apply to California businesses can provide owners with a simple and straightforward guide, which can be used to ensure everything is handled appropriately.

The size of a business can certainly change the number of steps that must be followed before doors are officially closed. Owners of large corporations or bigger businesses simply may be required to handle more than those of smaller companies. However, there are some procedures that are required regardless of company size, some of these could include:

Filing appropriate IRS forms
Collecting assets
Resolving debts
Publishing notice of intent to dissolve
Filing any necessary documents with the state tax authority

These procedures are just a few of many that may apply to closing out certain businesses. An experienced business law attorney can help by providing a list of state requirements that are specific for any business type. Along with providing assistance in creating a procedural checklist, an attorney can ensure all legal bases are covered so business owners can close out their company with as few legal issues as possible.

Business law attorneys are available to help company owners in California through every stage of business ownership — from opening and operating to closing up shop. While business dissolution can be complex, it doesn’t mean the whole process has to be a nightmare. Creating a procedural checklist and seeking legal assistance, when needed, can make the process easier to handle.

Source: FindLaw, “Dissolution and Winding Up Checklist“, Dec. 4, 2014

closing a business, Sales & Dissolutions

Common Reasons Tech Business Startup Firms Fail in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Wednesday, October 1, 2014.

Business is all about planning ahead. This is definitely true in the technology industry. Not only does planning ahead include an effective marketing plan and efficient operations plan, it also makes sure that business-planning strategies avoid some of the most common mistakes made by entrepreneurs in the technology startup industry in California. Doing so can ultimately make the difference between success and failure for a technology business startup.

One of the main reasons that technology startup ideas end up failing is that there is no need for the service in the marketplace. A recent survey revealed that 42 percent of firms failed due to failure to identify a target market. The more detailed a profile that a firm has for its target market, the more clearly the firm will be able to direct its resources and marketing efforts.

Another common mistake made by technology startups is having inefficient working capital. Almost 30 percent of technology firms failed due to not having enough cash to continue operations. Therefore, it is best to spend time in the beginning fundraising phases to ensure that a new company will start operations with a healthy amount of liquidity. This can allow business owners to have the flexibility needed during the startup phase, while also enabling firms to spend funds more effectively and strategically.

However, the best marketing strategy and operations plan may be useless if a business startup is not properly formed. This means that the company will have to comply with applicable rules and regulations specific to the new firm’s industry. Also, the correct legal paperwork will have to be submitted to the proper California regulating agencies.

Source: Baltimore Business Journal, “5 reasons your tech startup is likely to fail“, Sarah Gantz, Sept. 29, 2014

business failures, Business Formation & Planning, planning to fail, tech startups

Reverse Business Merger is an Alternative Way to Obtain Funding

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Monday, May 5, 2014.

Startup companies have many challenges to overcome when starting a new business. One of the most common and significant challenges facing a startup is obtaining venture capital in California or in any other state. Many times there are more startups looking for funding than there are venture capital and Angel investors available. However, one unorthodox method of obtaining capital, which has gained some popularity recently, is using a business merger to garner funding.

However, startups looking to go this route are engaging in a specific type of merger known as a reverse merger. This type of merger is usually utilized in order to avoid the process and expenses related to an Initial Public Offering (IPO). Usually, a dormant shell company is chosen for this type of transaction. However, there are many shell companies that have less than pristine histories; therefore, it is important to properly research a shell company’s past in order to avoid any unforeseen liabilities.

Also, many public shell companies that are ready to be sold are not listed by NASDAQ, but instead are traded on less prestigious avenues. For example, the OTC Bulletin Board is a common place where shell companies are listed instead of the NASDAQ. Although these companies can be renamed and moved to the NASDAQ, this may end up negating any savings on expenses and time, which would be the original intent of a reverse merger.

Additionally, one must be sure to follow all proper rules and regulations when completing a business merger of any kind in California or any other state. This means having full knowledge of applicable laws. Incorporating a compliance strategy into one’s business plan will help to avoid future lawsuits and criminal charges, which would be highly detrimental to any business.

Source: Forbes, “Is A Reverse Merger The Way To Fund Your Startup?“, Martin Zwilling, May 2, 2014

business funding, IPO, Mergers & Acquisitions, reverse merger, shell companies