Mergers & Acquisitions

Business Purchase and Sale: Considering Employees

One of the most important parts of a business is the people doing the day-to-day work. When looking into purchasing a business, it’s important to identify and understand the needs and rights of key employees, review existing employment agreements, and consider any employment related successor liability issues that may come up as part of the transaction. We’re continuing our series on the Purchase and Sale of a Business by highlighting important employee related considerations when purchasing a business.

Identifying (and Locking Up) Key Employees

Does the business you’re purchasing rely heavily on a few key employees? Especially for service-based businesses that rely heavily on relationships, these key employees can be one of the most valuable assets for the business. Making sure you...

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Mergers & Acquisitions

Five Key Securities Issues in Due Diligence of M&A Deals

In business acquisitions, and especially in business acquisitions structured as stock purchases, there are a number of securities issues you’ll want to be on the lookout for. For the purposes of this post, you can think of a security as the stock or other equity interest in a company like an option or warrant. (You can check out this post for a more detailed discussion of what a security is.) Below I’ve listed 5 key securities-related due diligence issues for you to consider when purchasing a business.

We’ll start with the two key issues that are important for acquisitions of both stock and assets; we’ll finish with three key issues that primarily affect stock acquisitions:

Issues for acquisitions of either stock or assets

Two issues are of...

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Business Startup

How to Dissolve Your Washington Business

If you’ve decided to move on from the business you’ve started and it doesn’t make sense to sell it, you’ll likely want to dissolve your Washington business. To do so, you’ll need to consider the following steps:

Dissolving a Corporation 

To voluntarily dissolve a Washington corporation, generally the corporation’s board of directors will propose dissolution and submit the proposal for a vote by the shareholders. Two-thirds of the authorized shareholders then must approve the proposed dissolution. The initial directors, incorporators, or board of directors may also dissolve the corporation by majority vote under certain circumstances, like when no shares have been issued.

Following the vote to dissolve, the corporation must file Articles of Dissolution with the Secretary of State to notify the state of the corporation’s intention to...

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Mergers & Acquisitions

Archive Series | Due Diligence in the Purchase and Sale of a Business

If you are considering buying or selling a business, it is helpful to understand the due diligence process. This series from our archives provides a basic overview of the legal issues you should consider (that is, the due diligence you should consider doing) when buying or selling your next business:

An Introduction to Due Diligence Legal Issues Financial Issues Operational Issues Intellectual Property Material Contracts and Information Miscellaneous Issues

Photo: shrinkin’violet | Flickr

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Mergers & Acquisitions

Purchase and Sale of Business: Drafting the Business Purchase and Sale Agreement

Once you’ve nailed down the terms of the acquisition (usually in a letter of intent), it is time to begin putting the terms into a formal agreement usually referred to as a business “purchase and sale agreement.” This agreement will spell out the seller’s and buyer’s rights and responsibilities with respect to the transaction. We’re continuing our series on the Purchase and Sale of a Business by highlighting some of the major considerations when putting together the business purchase and sale agreement for your acquisition.

Structure of the Sale: What assets and liabilities are included?

As we discussed in a prior post in this Purchase and Sale of a Business series, you’ll need to sort out whether the sale will be an...

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Intellectual Property

Purchase and Sale of a Business: Intellectual Property Considerations

We’re continuing our series on the purchase and sale of a business with a look into intellectual property considerations when purchasing a business. Intellectual property is a large part of many companies’ value. Failing to sort out potential restrictions on the use and further development of a company’s IP may leave the buyer with a significantly less valuable company than it anticipated. Below are some of the major intellectual property considerations to have in mind when you purchase a business:

Ownership of and Right to Use the IP

The first hurdle, and perhaps the most important consideration when reviewing a target company’s intellectual property rights, is confirming that it owns, or at least has a valid license for, all of the key...

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Mergers & Acquisitions

Purchase and Sale of a Business: Structuring the Transaction

We continue our series on the purchase and sale of a business by exploring the structure of the transaction. These transactions generally fall under one of two categories, an asset sale or a stock sale. Today’s post highlights some of the key features and differences between the two structures.

The Asset Sale An asset sale is the purchase of the individual assets and liabilities of the business. In an asset sale, the seller will retain possession of the legal entity, e.g. ABC Corporation, and the buyer purchases the individual assets of the company, including equipment, inventory, fixtures, licenses, goodwill, trade names, etc. Typically the seller will retain the company cash, and the seller often remains responsible for any long-term debt obligations.

Buyers tend...

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Mergers & Acquisitions

Due Diligence | Part 7 | Miscellaneous Issues

We’ve finally arrived at the last post in our due diligence section of our series on the purchase and sale of a business. In today’s post we explore some of the miscellaneous issues you should be aware of during due diligence.

Real Property Issues We’ve mentioned in previous posts that you should review all “material” contracts, which would include all leases, deeds, or other real property-related contracts. However, there are other, lesser known, real property issues that are often overlooked during due diligence. One of these “other” issues is easements and other restrictions on your ability to use the real property as you’d like.

An easement is a right of use over the property of another. For example, you may be purchasing a...

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Mergers & Acquisitions

Due Diligence | Part 6 | Material Contracts and Information

We continue our series on due diligence and our series on the purchase and sale of a business by tackling—yes, this word was chosen in part because of last night’s pre-season opener for our Seahawks—the next phase of due diligence: material contracts. So far we have covered the financial, legal, and operational issues associated with the due diligence process. In today’s post, we’re exploring one of the more time-consuming aspects of due diligence, reviewing every material contract of  the target company.

Who, What, When, Where (and How?) As we have been discussing throughout this series, it’s incredibly important to know the business you are acquiring in and out. This includes examining every contract the company has entered into and is bound by at...

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Mergers & Acquisitions

Due Diligence | Part 5 | Intellectual Property Issues

In today’s post we’re continuing our series on due diligence and our series on the purchase and sale of a business. So far we have covered the financial, legal, and operational issues associated with the due diligence process, and today we’re going to explore the intellectual property issues associated with due diligence. For many businesses, the most expensive asset the company owns is its intellectual property, which makes understanding any IP-related issues increasingly important.

Registered Trademark Rights One important issue to explore when purchasing a business is whether that business has any federally registered trademarks. By registering a trademark with the United States Patent and Trademark Office (the USPTO) you receive broader protection for your trademarks and an enhanced ability to protect your...

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