Articles Posted in Business Transactions

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Mergers between companies can get complicated. First, there are potential regulatory issues, at both the state and federal level. These regulatory issues can involve multiple agencies and be quite complex, requiring the use of lawyers specializing in such issues. This, of course, can drive expenses up considerably. Further, there are potential issues arising from differences between the companies merging, including differences in corporate culture. All of these issues require consideration, and many companies, especially companies engaging in their first merger, might not even be aware of what the potential issues are.

Regulatory Issues Often are the First and Most Significant Hurdle in a Merger

Under federal law, the Federal Trade Commission or the Department of Justice, depending upon the industry involved in the merger, must be notified of the merger if three tests are met. These tests are required under the Hart-Scott-Rodino Act, or HSR, the antitrust law that governs mergers. The most important test under HSR regulations is the size of the merger. Depending on if the merger breaks a value threshold, then the federal government may need to be notified. If your merger is large enough to require reporting under the antitrust laws, you must make an initial filing of certain documents known as a 4(c) filing, referring to the section of the HSR Act that requires the filing.

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Fotolia_79495533_Subscription_Monthly_M-300x200Any business that deals with customers – meaning all businesses – has customers that are habitually slow to pay for the goods or services that they purchase. Unlike retail transactions such as those that occur at a grocery store, many business-to-business transactions are not immediately completed. Customers don’t necessarily have to pay before the goods or services leave the building. Payment terms might be 30 days net or 60 days net, but the customer has time to pay for what they have purchased. But what can you do when those 30 or 60 days pass by without a payment? And what can you do if that time continues to drag on and months go by without a payment from your customer?

Don’t Delay with Delinquent Customers

There are many reasons – and excuses – for delayed payments or nonpayment by customers. If you invoice by mail, it is possible that the invoice was not delivered, or that it was lost internally at the customer’s business. Depending upon the size of the business, it is possible that no one at the customer’s business knows that a bill has not been paid. Reasons and excuses aside, your business cannot afford to operate without being paid.

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Mergers in the tech world are quite common. In a merger, one or more companies combine to form a new company (i.e., legal entity). Mergers can be complex and have many moving parts. The transaction can often include legal documents, valuation, key deliverables, operational logistics, regulatory matters, and financing and payments. A Silicon Valley M&A attorney can assist with your merger M&A transaction and handle multiple facets of the transaction.

Structuring the M&A Transaction

A merger and/or acquisition is a term that can be used to represent several types of transactions. Some M&A transactions might include:

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Fotolia_172702870_Subscription_Monthly_M-1-300x187Successful merger and acquisition (M&A) transactions often rely on how well the parties involved communicate and how efficiently they can complete negotiations and due diligence. There are many steps that have to occur from initial interest in an M&A to full signature, payment, and completion of the transaction. Both parties, the buyer(s) and the seller(s), need to make sure the transaction is mutually beneficial. The Letter of Intent is one important step in this process.

Purpose of an LOI

The first step in formalizing any M&A transaction is usually a Letter of Intent (LOI). This document can sometimes also be called a Memorandum of Understanding (MOU). The LOI is a written document that outlines the buyer’s initial intentions and may include pertinent information and conditions related to the transaction. The delivery of an LOI to another party presents the seller’s intentions and begins potential negotiations. If you are the party issuing an LOI, you will want to make sure your letter is professional, clearly communicates your intentions, and sets forth realistic expectations. An experienced M&A attorney can assist in the drafting of your LOI.

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Fotolia_171059478_Subscription_Monthly_M-300x200A right of first refusal is an important legal right in business law. It gives a certain party the opportunity to engage in a transaction before another party can do so. The right of first refusal can be used in many different contexts and can be extremely important for many companies. If a right of first refusal is granted and not subsequently honored, it can lead to a legal dispute.

If you are including a right of first refusal provision in a contract, you should always have a skilled business lawyer review the contract to ensure the provision properly protects your rights. We can also ensure the contract allows you the appropriate remedies should another party breach the contract provision.

Situations Involving a Right of First Refusal

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Fotolia_180008799_Subscription_Monthly_M-300x200Startup companies often use stock options to attract new quality talent. If you have decided to do so, there are some special considerations when deciding the best approach to compensate your employees. Two common approaches include restricted stock and stock options.

What is Restricted Stock?

Restricted stock is a stock plan that gives particular employees a right to purchase stock shares. These restricted shares may be at a discounted value, fair market value, or even at no cost. Despite the right to buy the restricted stock, the shares are not actually owned by the employee until a particular triggering event occurs. For example, a company may restrict the transfer of the stock until a particular amount of time has elapsed (e.g., three years from the date of hire). Another example would be a condition regarding company performance (e.g., $1m in gross revenue). The employee then takes possession after the triggering event occurs, thereby lifting the “restriction” on the stock.

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Securities law is something you might hear in the news because of some violation or in relation to white-collar crime. With the wild ride that the stock market, including the gradual introduction of permissible, legal trading of cryptocurrencies (like bitcoin) and tokens from initial coin offerings (“ICO’s”), has securities laws a popular, researched and well-debated topic among entrepreneurs, businesses, investors, lawyers, and regulators. But, what are these laws? Securities laws are detailed and complex laws that govern securities. Below, we discuss some of the basic concepts of securities laws. For more information, contact a Mountain View transctional attorney today.

Understanding Securities

A security is a common word used in investment circles. It is a broad term that refers to the instrument used in certain transactions, financing or investments that are sold in various financial markets. The Supreme Court uses the Howey Test to determine whether a transaction represents and investment contract (and thus a security) by using the following definition of when an investment contract is a security: “a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.” Examples of securities include:

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Palo Alto business owners are faced with heavy competition in the Silicon Valley, all of which are looking for the best practices, methods, and trade secrets. Some of a company’s most valuable assets can be found in your intellectual property. Each year intellectual property theft costs businesses billions of dollars. If you think your intellectual property might be at risk of being stolen or you can confirm it has been stolen, you need to act fast.

Different Types of Intellectual Property

In order to protect yourself from Intellectual Property theft, a business owner must first define what they need to protect. For example, if the business owners want to secure a method of a certain process, a formula specific to their company, or even lock down a logo and name to fight off competition, there will be different applicable forms of legal protection to consider and utilize. There are several forms of protection, some of them being:

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In the tech-rich culture of San Jose, protection of intellectual property and consumer data is a constant concern for business owners. How can owners invoke legal protection for these assets in order to protect their legal interests and reassure customers that their data is secure? The answer depends upon the different types of liability a business can face when consumer data is compromised.

Contractual Liability

Contractual liability arises when one (or more) parties in a contract fail to fulfill their responsibilities agreed upon in the contract. Many technology companies have contracts with consumers. These are often contained in the Terms of Service issued to users of mobile apps or software. Some can be more detailed – especially when the company is hired to perform a specific service to the customer. For example, when a company provides customers with secure data storage based on a private server or the cloud, the Terms of Service are typically very inclusive. If such consumer data is compromised, a technology company can face contractual liability for failing to provide the secure data storage offered by the terms of the contract.

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Fotolia_183822998_Subscription_Monthly_M-300x176Many San Jose business owners find themselves embroiled in legal disputes with vendors, clients, employees, contractors, and other business relationships. It is highly likely that a legal dispute will arise at some point during your business operations. It can be difficult to know how to resolve such a dispute. Litigation can subject a business to unnecessary time, effort, and costs which will not always be reimbursed after a trial. Yet in some cases, litigation remains the only method of effectively preserving important legal rights.

Mediation and arbitration provides clients with the ability to settle their claims quicker and for less expense. However, one of the biggest cons of mediation and arbitration is the fact that neither party will be totally satisfied as the result of settlements is a compromise.

The experienced San Jose corporate attorneys at Structure Law Group have extensive experience in litigation, mediation, and arbitration.They can help you determine how best to protect your financial and legal interests in a business.

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