Virtual General Counsel LLC
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Denver Business & Commercial Law Blog

Negotiating a small business merger

There are many business dealings that take place every day in Denver and throughout Colorado. One of the most complex transactions a business can undertake is a merger and acquisition. A merger takes place when two or more businesses combine, creating a single entity. Mergers allow both parties to benefit financially from their respective strengths and resources. There are numerous issues that will need to be negotiated to make the merger successful.

The companies merging will need to determine what legal structure the new entity will take. Will it be a corporation? A limited liability company? Or something else? The parties to the merger will also need to decide on how to combine management, executives and their respective boards of directors. Sometimes, to avoid redundancies, some workers may need to be let go.

How can subcontractors and suppliers obtain a mechanic's lien?

Contracts between subcontractors and suppliers in Denver are often entered into with general contractors, who then contract with the property owner to complete a construction project. All these parties have a stake in the work being done per the terms of the contract. Therefore, if a subcontractor or supplier is not paid per the terms of the contract, they may pursue a mechanic's lien.

Mechanic's liens are a tool available to subcontractors and suppliers who have not been paid what they are due. These liens constitute a legal claim against the property that the subcontractors have worked on or suppliers have contributed to. It is important to understand that, even if the property owner paid the general contractor what they were supposed to under the contract, if the general contractor does not then pay the subcontractor or supplier what they are due per the terms of the contract, the subcontractor or supplier can pursue a mechanic's lien on the property.

Basic topics to address in a partnership agreement

Business partners in Denver often share the same passion for their jointly-owned enterprise, but it is still important to ensure that they have the same expectations about their respective roles in the business and a set of rules on how their business should be run. Therefore, they may want to execute a partnership agreement as part of the business formation process. Not only could such an agreement resolve disputes before they occur, but without one the business may be governed by state law.

There are a number of items one might want to include in a partnership agreement. The agreement should include the name of the partnership. Sometimes the business is named after the partners, while other times the partners decide to use a fictitious name. If so, they should make sure that name is not currently being used by another business.

Colorado sellers benefit from executing an acquisition agreement

When a small business in Colorado is being acquired by another business, one item that must be successfully executed is an acquisition agreement drawn up by the seller's attorney. This document protects the seller's interests as much as possible. There are numerous provisions an acquisition agreement should address.

First, the acquisition agreement should state whether the parties are executing a merger, asset purchase or other type of transfer. The sale price and any other relevant financial terms should be included in the agreement. If it is possible for one side or the other to adjust the price, this should be addressed in a manner that ultimately reduces the risk that the price will go down.

Are non-compete agreements lawful in Colorado?

When a person in Colorado starts a new job, it can be an exciting time. However, after being hired or during the course of employment, a worker may be faced with signing a non-compete agreement, stating that the worker will not work for a competing business if they leave the employment of their current employer. This can be very limiting on a worker, and for this reason, Colorado law has addressed the issue of non-compete agreements.

In general, per Colorado law, non-compete agreements are void. However, there are four exceptions to this blanket rule. It is important to know what these exceptions are, so one can understand the difference between lawful non-compete agreements and those that are not allowed.

Which small business structures shield owners from liability?

In a sole proprietorship or partnership, generally the owners of the business can be held personally liable for the debts and actions of the business. This is obviously not desirable to most small business owners in Denver. Fortunately, there are other ways to structure a small business that limits the business owner's personal liability for the debts and actions of the business.

One way to reduce personal liability is through the establishment of an S corporation. S corporations also have tax advantages that small business owners may wish to take advantage of. An S corporation has a board of directors and must hold board meetings each year. In addition, there is also paperwork that must be filed in order for the S corporation to be compliant with the law.

Struggling small business may benefit from a merger

Sometimes a small business in Denver finds itself mired in financial difficulties. It may find the costs associated with manufacturing its products have gone up. Or, it may find that its customer base is shrinking. Small business can also suffer if there is an increase in competition. What this comes down to is that small businesses in these situations will want to remedy them as quickly as possible, and one way to do so is through a merger.

Mergers take place when two companies join together to establish an entirely separate new business. Once the new business is formed, the original companies no longer exist. There are a variety of reasons why mergers may benefit small businesses; especially those that are struggling to keep their doors open.

What are some essential elements of a real estate contract?

Buying a house is an exciting event for many people in Denver, whether they plan to "flip" it or to live there for many years to come. However, one should not rush through the home buying process. One important part of the home buying process that requires careful thought and scrutiny is the drafting of the real estate purchase contract.

Of course, the real estate purchase contract will include the address of the property and how much it is being purchased for. However, there are other items to include in a real estate purchase contract to make it as legally sound as possible.

We guide Coloradans through the business formation process

Starting your own business or purchasing an established business in Colorado is an exciting endeavor, but it can also be an overwhelming one. For example, while you may have a grand vision in sight for your new business, it is necessary to ensure that all legal formalities are met -- something many people do not have much experience with.

For example, business owners need to decide what type of entity their business will be. Will it be a sole proprietorship, a limited liability company or a corporation? Each of these businesses entities have their own rules with regards with what legalities need to be followed when forming the business. In addition, business owners will be interested in ways they can be protected personally from the debts and liabilities of the business. Many businesses utilize contracts in their day-to-day operations, so contract disputes can arise. Finally, business owners may want to consider if there is a way to organize their enterprise so that forms of alternative dispute resolution must first be tried before a case involving the business can go to court.

What are the requirements for winding down a business?

When individuals in Denver join forces to form partnerships, they often see years of success as their business grows over time. However, the time may come where partners want to dissolve their business. They may each want to go their separate ways as they pursue new business opportunities, or they may simply be ready for retirement. Whatever the reason, when it comes to winding down a business, there are steps that need to be followed to ensure all the proper legalities are fulfilled.

First, if the partnership has a written partnership agreement, any rules regarding dissolving the business included in the written agreement should be strictly followed, along with any relevant state laws. If the general partnership filed with the state of Colorado as part of the business formation process, then it must also file dissolution documents with the state of Colorado.

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