Virtual General Counsel LLC
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Denver Business & Commercial Law Blog

Choose the right type of partnership for your business

Simply put, whenever two or more people own a business together and share in its profits and losses, they are said to have a partnership. However, it is always a good idea to get a partnership agreement in writing, so as to make sure everyone has the same expectations. A written agreement can save a lot of headaches later on, if or when the partners have disputes or decide to part ways.

The first step in creating a partnership agreement is to decide what type of partnership it should be. The most common forms are general partnerships, limited partnerships and limited liability partnerships.

Local media acquisition part of a nationwide trend

The news media business has been on shaky ground ever since the Internet started taking a bite out of its advertising revenue almost 20 years ago. The situation has grown even more precarious since the rise of social media disrupted the way many Americans get their news. Print media has been hit particularly hard, but television, radio and websites have struggled as well. What's more, the media landscape has changed for large media corporations and small businesses alike.

One result of these changes is an increase in mergers and acquisitions in the media business. Recently, Colorado Public Radio acquired the website Denverite from the company Spirited Media. The move followed similar acquisitions in other markets, as other public radio organizations snapped up websites such as Gothamist, LAist and DCist.

Set a business goal of acquiring a smaller business

A business's number one goal is to be profitable. While this may be true, there are many smaller goals a business will set in order to achieve this goal. One goal that may be on the agenda for a growing or established business is to acquire a smaller business. The ability to purchase a smaller business can indicate the growth and success a business has achieved.

It can also indicate that a business is willing to take their business to the next level. Making any large business decision, such as an acquisition, is a risk. Getting into business is a risk. Every decision a business makes is a risk, it's never a sure thing. So make as an informed decision as possible during a business acquisition.

Best practices to avoid nonperformance in contract disputes

When it comes to doing business, most businesses couldn't perform without the use of, or partnership with, other businesses. In theory, being is business is just as much about your customers as it is about the vendors you are engaged in business with. This is why it's so important to set up business relationships for success from the beginning. One way in which to do that is to set up a contract between businesses.

A contract is an agreement that both parties engage in which details the expectations and responsibilities of each party. A good contract will also consider stipulations in which breach of contract is committed by one or both parties. Breach of contract could come in many forms, including nonperformance by one or both parties. A contract can help to determine how a party can be held accountable and by what means.

How can a business practice due diligence when being acquired?

Whether a business is a few years, or a few decades old, it might be time for it to transition into a new phase by being acquired. Acquisitions are a period of change, but it can often mean bigger and better things for the company itself. So how can a company get itself ready for this transition?

One aspect of an acquisition process that an acquired business will want to attend to is due diligence. The acquirer will check off items on a list, formally, or informally in order to determine if the acquired property meets the valuation or to compare it to the existing structures, and business activities of the larger company. There are several topics of which smaller items of interest can be explored when doing due diligence in a merger or acquisition. Organization, financial information, physical assets, real estate, intellectual property, employees, licenses, environmental issues, taxes, and so goes the list, are all aspects that are important and need to be assessed through due diligence.

More growth, mergers expected for cannabis industry in 2019

Within the last several years since legalization in Colorado, the cannabis industry has seen impressive growth. With growth, comes a rapid speed of change in any industry. Generally made up of smaller businesses, the cannabis industry seems to be gaining speed towards larger, consolidated businesses. This is characterized by mergers and acquisitions.

Larger, more established businesses tend to acquire or merge with smaller businesses, such is the nature of the free market. However, entering into a merger or acquisition isn't a small feat. Understanding timing and market fluctuations is pertinent to any industry, including cannabis, in order to ensure the process is favorable and a smooth transition. When companies merge or consolidate, every aspect of that business needs to be blended and will come under scrutiny.

Choosing the best formation for your business

Choosing the correct legal formation for a new business is crucial. This choice will have major legal and financial implications for the future. It will determine not only the amount of taxes owed, but also whether or not the business qualifies for certain types of funding.

There are 15 common types of business formations, each with its own purpose and structure. An experienced business attorney can discuss a new business set-up and plan with an owner to determine the most beneficial type of legal formation. A single owner or married owners, unincorporated business is known as a sole proprietorship. It does not require registration with a Secretary of State, and it comingles personal and business assets.

Questions to ask when considering buying a business

When considering the purchase of an existing business, asking the right questions is crucial. It is here that you will find pertinent information to the current health of the business, as well as its future potential. So what should you ask?

First, delve into the financials. Ask questions such as, "Can I see your financial reports for the last 3 years?" or "What has been your sales percentage increase and profit each year?" Having this information will allow you to project future profits. If a current business owner refuses to provide financial information, it can be a red flag that there are some issues below the surface.

When can I sue for breach of contract?

If you are a small business owner, you are probably surrounded by more contracts than you realize. Between clients, customers, vendors, contractors, loans and purchase agreements, you have likely signed on the dotted line more than a few times. Unfortunately, you have also likely had to deal with other party not holding up their end of the bargain. So when does it reach a point where you can actually do something about it?

There are several situations in which a contract is considered to be breached, or in layman's terms, broken. However, in order for a court action to ensue, there must be what is known as either a "material breach" or an "anticipatory breach." A material breach is also known as a total breach. It takes place when a contract is irreparably broken and defeats the purpose of signing the contract to begin with.

What is a hostile acquisition?

The business world can cause many serious events and decisions. Most of us have heard the term "hostile takeover," whether in a movie or in real-life. This action is also known as hostile acquisition, and is often a complex, uncomfortable matter. By definition, the word hostile means unfriendly, antagonistic and opposed. In other words, it's usually not much fun.

A business is experiencing a hostile acquisition when another entity is attempting to takeover by way of shareholder vote. Management of the target business does not want the takeover to happen. Therefore, the acquiring company will make moves to bypass top management and obtain approval from shareholders. In a publicly held company, shareholders vote on members of the governing board. Just as easily as they may vote a member in or request removal, they may also choose to allow another company to takeover altogether.

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