Goerlitz Law, PLLC FindLaw IM Template2024-03-01T17:08:51Zhttps://www.goerlitzlaw.com/feed/atom/WordPress/wp-content/uploads/sites/1101077/2019/05/cropped-fav-icon-32x32.pngOn Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506642024-03-01T17:08:51Z2024-03-01T17:08:51ZSending formal notice
Sometimes, changes in leadership require other challenges at another company could contribute to a breach of contract scenario. It is therefore advisable in most scenarios to send advance written notice to the party that breached the contract. A letter outlining how they failed to fulfill contractual obligations and explaining the possible consequences, including penalties outlined in the contract, could sometimes motivate the party and breach of the contract to correct the issue.
Filing a lawsuit
Ideally, the parties embroiled in a dispute find a way to cooperate with one another to resolve a contract breach. However, a business that has refused to fulfill contractual obligations might continue to do so even after receiving a letter warning about the issue. The other party may soon determine that filing a civil lawsuit is a reasonable response to the breach of contract. If a letter was not enough to motivate someone to resolve the contract issues, notice of a pending lawsuit could be.
Many business lawsuits eventually settle outside of court. However, a small percentage do go on to trial because an amicable resolution simply isn't possible. A judge hearing a breach of contract case could award the plaintiff damages, terminate future contractual obligations or order specific performance. A judge can effectively enforce the contract by requiring that one party follow through with their promises.
At the end of the days, having the right support when responding to breach of contract issues can increase an organization's chances of successfully resolving their challenges.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506622024-02-01T14:37:33Z2024-02-01T14:37:33ZCompanies must now file reports with the federal government
As of January 1st, 2024, all newly-established businesses have the obligation to file a report with the federal government confirming the identities of those with a beneficial ownership interest in the business. The idea behind this change in policy is to enhance organizational transparency and counter money laundering, terrorism and organized crime.
Existing companies have until the beginning of 2025 to file a report identifying those with a beneficial ownership interest (BOI), as well as those who played a role in the initial formation of the company. Generally, anyone with a 25% or larger ownership interest must disclose their identity to the Financial Crimes Enforcement Network (FinCEN).
In some cases, those who have already played a role in the formation or funding of another company may become anxious about the mandatory reporting requirements. People may worry about having connections to too many businesses in one industry or to multiple companies that regularly do business with one another.
In some cases, the realization that someone may have to report their connections might sour them on the prospect of a merger or acquisition. A discussion regarding those with an ownership or formative interest in the company early in the merger or acquisition process could help avoid scenarios in which organizations invest in the preparation for a large transaction but cannot ultimately complete it.
Ultimately, tracking and carefully complying with new federal regulations can improve the chances of business executives and investors successfully completing a sizable transaction.
]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506602024-01-03T18:35:03Z2024-01-03T18:35:03ZFederal agencies may be watching more carefully
With the creation of large technology corporations and the increased digitization of daily life has come the dominance of new companies in certain marketplaces. Sometimes, these companies merge with one another or purchase start-ups to gain access to new concepts or patents. Doing so has enabled a few businesses to play an outsized role in the average person's digital life.
New federal guidelines require scrutiny of any sizable pending mergers. The Justice Department announced in December 2023 that it had updated merger guidelines for the first time since 2010. These updates include a thorough definition of concentrated markets, like those offering digital services. The Justice Department and the Federal Trade Commission may review proposed mergers more carefully when they may affect highly concentrated markets.
Although the guidelines do not reference specific mergers and acquisitions by name, it is clear that certain big tech transactions laid the groundwork for these new policies. Companies in the technology sector can therefore anticipate likely facing more pushback when they announce an intent to sell to a bigger company or to merge with a competitor.
In some cases, regulatory agencies may require certain changes to planned acquisitions or mergers before they would allow the transactions. Other times, regulatory authorities may ultimately decide that the merger cannot occur because it would violate federal antitrust standards.
Companies often invest tens of thousands of dollars or more when preparing for mergers and acquisitions, which means that a failed transaction would likely be a large loss for a company. Tracking changes to federal policy can help organizations better prepare for large transactions that could change the market and potentially trigger federal scrutiny.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506582023-11-30T08:54:16Z2023-11-30T08:54:16ZObtain financial evidence
Business partners have access to most, if not all, internal company records. Someone embezzling could very easily delete or falsify key company documents. It will therefore be very important to validate the accuracy of the current company records and to obtain copies of any records that show financial misconduct. Discrepancies between the actual financial status of the company and the current books can help prove financial misconduct on the part of one partner. So can records of wire transfers or invoices sent to clients that do not align with the funds received when the client paid. Checking account records and internal financial documents can help prove what has happened.
Create additional oversight
Once there is documentation supporting someone's concerns of embezzlement, they may then want to begin planning new ways to limit future embezzlement. Instituting new financial protocols for the company can be one way to diminish the likelihood of ongoing embezzlement while the partner still has access to business resources. It will also deter similar misconduct from others in the future.
Negotiate a partner's exit
Ideally, someone preparing to confront a business partner about suspected embezzlement will already have proof of what has transpired that they can leverage during their negotiations. Letting an executive go without prosecuting them is perhaps the most generous arrangement possible when a business partner has violated their fiduciary duty to the organization for personal financial gain.
It is important for those confronting a partner to do so in a confidential and safe environment and to maintain documentation of the conversation that they have with their partner. If the partner who embezzled is uncooperative, then it may be necessary to take additional steps, potentially including filing a lawsuit to recoup what they have embezzled or even contacting law enforcement officers.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506562023-10-27T16:31:41Z2023-10-27T16:31:41ZExcluding shareholders from meetings
Shareholder meetings allow those invested in a company to learn about its recent performance and express personal preferences regarding future operations. They typically have the right to attend those meetings, but those trying to freeze them out may try to exclude them. Both meetings held in secret without appropriate notice and instructions left with others at the business to prevent certain parties from entering meetings can be one way to freeze out minority shareholders.
Denying a shareholder their right to vote
Shareholders don't necessarily have a say in every decision that companies make, but they can influence the overall direction of the company in which they invested. They can also initiate a vote of no confidence to remove executives who have done the organization of disservice. Preventing shareholders from having a say, possibly by refusing to allow them to vote at crucial times, is common during a freeze-out attempt.
Refusing to pay dividends
Shareholders receive a return on their investment in the form of profit-related dividends. When an organization refuses to pay those dividends, shareholders can sometimes fight back. Often, freeze-out efforts culminate in shareholder litigation when it proves impossible to amicably resolve the issue and reinstate the rights of individual shareholders. Otherwise, their only option may be to sell their interest in the company and invest their capital elsewhere.
Being able to recognize a freeze-out when it occurs is crucial for those who have committed resources to help fund a business. Seeking legal guidance can be extremely helpful in this regard.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506542023-09-27T06:39:41Z2023-09-27T06:39:41Zpartnership agreement defines the business's operation, detailing each partner's rights, responsibilities and roles. It helps prevent misunderstandings and provides a reference point for resolving disputes. While it's tempting to rely on verbal agreements, especially among friends or longtime colleagues, putting everything in writing is essential for the long-term health of a partnership.
Defining the roles and responsibilities of each partner
It's essential to detail who's responsible for what in the partnership. This can cover financial contributions, day-to-day management tasks and specific business functions. By defining these roles, you can prevent overlaps and ensure that no critical task falls through the cracks.
Determining how profits and losses are shared
While you might assume profits and losses are split 50-50 in a two-person partnership, that's not always the case. The agreement should spell out how these will be divided based on factors like capital contribution, workload or other criteria agreed upon by the partners.
Setting out decision-making processes
Decisions can range from day-to-day operational choices to major strategic moves. The agreement should detail how decisions are made, whether by unanimous agreement, majority vote or other methods. It's also helpful to specify which decisions require mutual consent and which can be made individually.
Handling disputes and resolutions
Even the best partnerships can face disagreements. Your agreement should include a dispute resolution process through mediation, arbitration or another method. By setting this up in advance, you're better equipped to handle issues reasonably and minimize disruption to the business.
Establishing a process for adding or removing partners
Eventually, partners may wish to leave the business, or new ones might be added. The agreement should detail how this process works, from how the departing partner's share is handled to how new partners are integrated into the business.
Being proactive and thorough when drafting a partnership agreement can save a lot of headaches down the road, as it can lay a solid foundation for a productive and harmonious business relationship. Seeking legal guidance when drafting an agreement can help to better ensure that everyone’s interests are appropriately protected as well.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=506452023-08-24T18:26:07Z2023-08-24T18:26:07Zafter a layoff or termination. But, workers and companies may have a different view on the circumstances at the time that someone leaves their employment, and this disagreement – which can affect the viability of severance expectations – can potentially lead to litigation.
Workers may misunderstand their rights
Some workers may develop an unreasonable sense of entitlement when it comes to severance pay. Even when there are clear terms outlined in their contract with the company that would diminish or eliminate their severance package, they may still try to claim that they should receive the full severance pay that they negotiated before signing their employment contract. Despite losing their job for cause or failing to meet key performance metrics, they may still demand severance pay.
Particularly when the worker is not the one to initiate the separation, they may feel concerned about their future and may believe that their severance pay is the only thing ensuring their financial stability while they look for new employment. Workers may try to claim that their termination was wrongful or that the company's refusal to pay the full severance amount is a violation of their contract. Businesses, therefore, need to both include very specific terms in contracts that discuss severance pay and very carefully document the circumstances that led to a worker's termination and theoretically justified denying them severance pay.
Settling can be a viable solution
Even in a situation where the company is well within its contractual rights to deny severance pay, a lawsuit on the matter could be both expensive and a source of bad brand publicity. Some organizations do choose to settle severance disputes by making concessions to recently terminated workers to keep the matter out of court.
Reviewing a contract is crucial when a company must make decisions about an employee who has severance pay expectations. Seeking legal guidance if concerns arise is an important proactive step that should also be taken to better ensure that everyone’s rights and interests are protected moving forward.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=504922023-07-24T23:57:09Z2023-07-24T23:57:09ZWhat are some of the most common choices?
The business valuation process involves looking at a company's resources and debts, the condition of its assets and even what goodwill it has with the local community to calculate what the business is worth. Many of these factors are subjective and require current financial figures or market research to establish.
The business valuation process may look at current income, likely future revenue, projected growth and the value of existing assets, ranging from machinery to patents, to establish a reasonable fair market value for the organization. Some of the more common business valuation approaches include:
the discounted cash flow method
the market capitalization method
the earnings multiplier method
the times revenue method
the book value method
the going concern method
the liquidation value method
There are benefits and drawbacks to each approach, and factors ranging from what information the company proposing the acquisition can access to the industry in which the acquired business operates can influence the best method for business valuation.
Regardless of what method a company uses, being fastidious to avoid committing to an unrealistically high price and overpaying for a business is of the utmost importance. Discussing the acquisition process with a legal professional who is familiar with complex business valuation can help to take some of the guesswork and uncertainty out of the process.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=504902023-06-26T15:11:41Z2023-06-26T15:11:41ZEvaluating assets and combining facilities
Sometimes, business mergers result in a company maintaining all of the facilities operated by the independent companies, but many times, they will combine the two organizations into one central location. This may mean getting rid of all of the commercial real estate previously rented or owned by the businesses to acquire a newer, bigger space.
Other times, businesses from one company's facilities into the others. Reviewing the actual spaces is only the first step. It will be very important to have a detailed inventory of the assets at every property and to evaluate the usefulness of each space before making final determinations about leases or the sale of certain properties. Companies may need to liquidate equipment or arrange for the transportation of certain machinery from one facility to another.
Reviewing staffing and potentially downsizing
After two companies combine facilities, they may no longer need two separate maintenance crews. Sales teams, human resources departments and even the executive suite may all have redundant positions now that the two companies have combined. It may be necessary to eliminate some positions and either transfer workers to different roles within the company or conduct layoffs and terminations as necessary to streamline the staffing for the merged final organization. This process should also involve retention efforts to avoid the loss of certain key members of different teams during the transition.
Being proactive about assessing the major changes and reductions that are usually necessary after a merger can help businesses prepare for a successful transaction. Seeking legal guidance can be truly helpful as well.]]>On Behalf of Goerlitz Law, PLLChttps://www.goerlitzlaw.com/?p=504792023-05-27T00:42:45Z2023-05-27T00:42:45ZWhy did the FTC act?
The FTC asserts that Amgen Inc. would control too much of the market if it were to acquire Horizon Therapeutics PLC. The company would effectively have a monopoly on the drugs used for thyroid eye disease and chronic refractory gout. The FTC specifically cited the possible abuse of rebate programs to help strengthen a monopoly regarding the treatment of those two diseases. In theory, those seeking treatment for either eye issues related to thyroid conditions or gout could end up unable to access treatment due to a lack of competitors or trapped into paying an unfair price because there is no other company on the market to force the business to price its drugs competitively.
Business transactions can fail for many reasons
It remains to be seen if Amgen Inc. will be able to argue against the FTC's claim and move forward with its acquisition of Horizon Therapeutics PLC. If the purchase fails, the situation will mean big losses for the businesses. The process of researching and negotiating a merger can be very expensive, and the cost involved may grow exponentially when the businesses face opposition from regulatory agencies. Therefore, companies contemplating mergers and acquisitions often need to plan carefully and look at the market before taking action to avoid enforcement actions or lawsuits that could derail the project or drastically increase how much it costs and decrease how much it benefits the business.
Understanding when regulatory agencies may attempt to stop pending acquisitions may help executives and other business professionals better recognize when mergers or acquisitions could be more problematic than beneficial for a company.]]>