My friend, Rob Schulz, recently asked me to join him on his firm’s podcast to discuss things business owners can do to prepare for unexpected events affecting their companies.
Growth through acquisition of another company is a legitimate strategy that has been with us for a long time. When a privately held acquisition target is found, one of the primary decisions is whether to buy the stock in the company or buy its assets. Outlined below are some of the things that should be considered in making that decision. In either case, it is important to weigh the pros and cons with respect to price, risk, deal complexities, tax implications, licensing, legal consequences, and other considerations.
Buying a business is a challenge even in the best of circumstances and carries risk. Potential buyers should make sure that ample time is allowed for due diligence in the purchase agreement, and that the time is efficiently used to fully investigate the business. There will often be red flags that require extra attention. As with all major purchases, emotion should play no part in the decision-making process.
In 2021, Congress passed the Corporate Transparency Act (CTA). Shortly after, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCen) began work on regulations designed to implement the CTA. The purported purpose is to combat illegal activity that is hidden behind business entities (for example, money laundering). The proposed regulations have now been published, and it is clear that they will require closely-held businesses to report ownership and other information to the Treasury.
The new legislation will have a real and meaningful impact. Now, companies that are owed money or are the victim of a breach of contract have the right to recover their attorney’s fees if they are successful in the lawsuit.
Getting sued in today’s business environment is pretty much a cost of doing business. But, that does not mean that it should be the end of your business. This short article is designed to help you navigate the waters if you do get sued.