You've poured time, money, sweat, and love into building your company. Now, you’re ready to sell your business and reap the benefits of all your hard work.
The right business purchase transaction can sell your business at a profit while the wrong approach can leave you worse off than you’d hoped. Although your business is a professional venture, building something from the ground up makes for a personal and emotional undertaking. Most business owners feel some pride of ownership over what they’ve accomplished – and rightfully so, as building a successful business is anything but easy.
You must do your due diligence before you sign away your business rights to someone else. The last thing you want is to have your hard work stripped from you without proper credit or compensation. You want to make sure all the important issues have been considered and addressed before the ink dries on your business purchase agreement.
The best way to protect your interests in a Philadelphia-area business sale is to hire a local business lawyer to help with the process. Your attorney can help:
Preparing to Sell Your Business
The process of selling your business can be time-intensive, emotional, and filled with ups and downs. A business lawyer can help make the process go smoother from the beginning. Starting on the right foot can position you for the best success.
First, you should establish why you're selling your business. Any potential buyer will want to know and the answer will set the tone for your negotiations.
You can show documentation to prove:
It's never too early to start planning to sell your business if that's your ultimate goal. The sooner you get started, the better you can develop your business strategy, record-keeping practices, customer engagement, and management operations to that end.
Valuing Your Business for Sale
Business negotiations start and end with price. How much do you sell your business for?
A prospective buyer will approach you with a Letter of Intent (LOI) that includes their offered price. How you respond depends on how you value your business.
When it comes to appraising the value of your company, accuracy is key. Pricing too low can cheat you out of the profits you deserve while pricing too high can derail the deal.
Valuation involves looking at both the intrinsic aspects of your business and any relevant extrinsic factors out in the world. When valuing your company, you must consider:
Your lawyer will help assess your situation and make the best decision that matches your goals. While a business broker can help find a buyer for your business, your legal team makes sure your interests are represented in your business purchase agreement. That means drafting the terms of your agreement according to the outcome of your negotiations.
Other Considerations for Selling Your Business
Selling your hard-built business to someone else can be a challenge, not to mention an emotional experience. If you're closing your business and selling your assets, you may not care who buys them as long as the deal is quick and profitable. But if you care about the company continuing your vision, you may want to sell only to someone you trust. This is especially true if you expect to enter into a partnership or shareholder agreement under the terms of the sale.
You may have a buyer in mind already – maybe even an employee who’s ready to take over for you. When it comes to buyers outside your company or industry, you should investigate their background as much as they evaluate your business.
Ready to get started? Call Holmes Business Law today at 215-482-0285 to talk to a Philadelphia lawyer about your options for selling your business.
With many areas heading again into lockdowns and severe business restrictions, business owners are again scrambling to survive.
In this video, we present a few ways business owners can try to mitigate this latest round of business closures and restrictions.
If your business is looking for some help getting through the restrictions and needs some legal advice, feel free to reach out to our office at: 215 482 0285.
Even with the challenges of the coronavirus pandemic, business still continues and new opportunities present themselves every day. Buying an existing business is a common approach to expanding your market share or entering into a new market.
Business purchase transactions – otherwise known as mergers and acquisitions – tend to be complex whether you're the buyer or the seller. While a seller may be intimately familiar with the operations and finances of a business they’ve built themselves, an outside buyer must take care to do all the proper due diligence before purchasing.
As a buyer, you usually have only a limited time to evaluate and appraise every important factor of the business you're looking to buy. Once you complete the sale, you become responsible for any liabilities owed by the business you just bought. If you overlook a critical detail or fail to ask the right questions before your transaction, you may agree to a business purchase agreement that ends up costing you more than the sale was worth.
One of the biggest mistakes you can make going into a business purchase transaction is to do it without the help and counsel of a lawyer. Imagine buying a business only to find out a couple of years later that you owe thousands of dollars in back taxes or debt. A business lawyer’s job is to anticipate potential issues that may arise and address them in your business purchase agreement so that you’re covered against these types of unpleasant surprises down the road.
If you're looking to buy a Philadelphia area business or company, Holmes Business Law can help position your new acquisition for the best possible success. Call our office today at 215-482-0285 to talk to an experienced business lawyer about your options.
How Do You Buy an Existing Business?Buying an existing business involves several steps that may vary depending on the approach you choose to take. Your business lawyer can help you navigate the many decisions you’ll have to make throughout the buying process.
First, you must choose how to structure your deal.
Once you choose the type of deal you want to pursue, you must determine the purchase price that you’ll propose to the seller. Here, you’ll likely have to involve the expertise of business appraisers, investment bankers, accountants, and other valuation specialists at the direction of your lawyer. Based on your bargaining power, liquidity, and risk tolerance, you can offer the seller cash, equity, debt, assets, or a combination compensation package.
Once you've determined your strategy, your lawyer will draft a letter of intent (LOI) to present to the seller for both sides to sign. The LOI should cover:
Due Diligence Checklist for Buying an Existing Business
The due diligence process involves an in-depth investigation of the company you plan to buy. Every business purchase transaction is unique, but some common considerations include:
Failing to properly investigate the company you want to buy could leave you with unexpected financial and legal problems – with costly losses after the fact. Your investigation may even reveal dealbreakers that lead you to ultimately walk away from the transaction.
What Should Be Included in a Business Purchase Agreement?
Your lawyer’s job is to draft a business purchase agreement that accurately reflects the terms of the deal as agreed between you and the seller. The document helps protect both the buyer and seller from legal and financial risks that may come up after the business sale.
Your business purchase agreement should include:
You may have to file other paperwork in addition to executing your business purchase agreement. That could include updating secretary of state filings, changing the operating agreement, change in ownership forms for franchises, or resolutions authorizing the transaction from an entity’s board of directors or shareholders.
Talk to a Philadelphia M&A Attorney Today
No matter what industry you’re in or looking to get into, buying a business is a major undertaking with a lot at stake. You want to set yourself up for your best chance at success. That means taking stock of a great number of moving parts – financial, legal, and regulatory.
An experienced business lawyer can help you pursue your goals with your best interests in mind. Every business venture is unique. Call the Holmes Business Law Philadelphia office today at 215-482-0285 to discuss your options with a business lawyer dedicated to your vision.
In Pennsylvania, the first COVID-19 employee wrongful death lawsuit was filed on May 7, 2020. The lawsuit argues that the employee’s exposure and death from coronavirus was “predictable and preventable” by their company. The worker’s surviving family claims the company should’ve taken better precautions to protect its employees.
While COVID-19 has affected all of us, small, local, and medium-sized businesses are bearing the brunt of the coronavirus pandemic. Most smaller companies don’t have the same margins and resources as larger companies and corporations. A single employee COVID-19 lawsuit could make the difference between your business surviving the pandemic or not.
Despite your best efforts, what if one of your employees gets COVID-19 and they claim they got exposed on the job? Is the law going to hold you, the business owner, responsible?
The answer depends on your state's COVID-19 response, workers’ compensation requirements, and business tort laws. If your state's workers’ compensation laws cover COVID-19, then your workers’ compensation insurance can shield you from liability. But you may still need to take other measures to protect yourself and your workers from coronavirus exposure.
The best way to shield your company from expensive coronavirus liability is to speak to a local Philadelphia-area business lawyer about your options. Skimping on the legal foundations of your business now can hurt you later on down the line.
Every business is different, with unique operational structures and needs. At Holmes Business Law, we create solutions catered to your company and your industry. Call our Philadelphia business law firm at 215-482-0285 now to discuss your company’s best path forward.
You can also read our other posts in this COVID-19 business series:
Specifically, the employee’s family is suing the company for:
At this point, business owners should reasonably be aware of pandemic risks. To lower your risk of liability, you should follow local, state, and federal COVID-19 laws and guidelines. Most businesses that are allowed to operate can only do so if they take the proper precautions to protect their employees and customers from coronavirus exposure.
Depending on your company’s location and operations, that could mean:
Talk to a business lawyer today about the steps your company should take to protect yourself, your employees, and your shareholders. An experienced legal professional can provide creative solutions that you might not have considered otherwise. Creating a sound plan now can set you up for success and help you avoid further trouble in the future.
COVID-19 and Workers’ Compensation InsuranceWorkers’ compensation laws help protect businesses from lawsuits by employees who get injured or sick at work. Most companies with employees must have some type of workers’ compensation insurance to make sure that their workers are covered.
The question is whether coronavirus falls under workers’ compensation coverage.
Some states have a workers’ compensation exclusion for “ordinary life diseases” like the common cold or flu. Washington state, for example, recently excluded COVID-19 illness from its workers’ compensation laws. As of March 20, 2020, the Pennsylvania state website classifies COVID-19 illness as an “injury or occupational disease” that qualifies under workers’ compensation “depending on the type of work performed.”
If that sounds vague to you – you’re right. The novel coronavirus is so new that the law around it is being written as we speak. Contact a Philadelphia-area business attorney for a better idea of what to expect for your business moving forward. Your lawyer can determine the risks you face and help you implement a safer, more coronavirus-resilient business strategy.
Nobody could’ve foreseen the effect that COVID-19 would have on the world. As we round out the seventh month of the pandemic, it’s clear the coronavirus is here to stay and we must adjust to protect ourselves and the people around us.
A good business attorney will help you:
As the pandemic continues, it will probably lead to no small amount of lawsuits. Although there’s no blanket guarantee to avoiding liability during COVID-19, you can take reasonable, actionable steps to reduce your legal risk. Call the experienced Philadelphia attorneys at Holmes Business Law today at 215-482-0285 to schedule your consultation.
Whether you’re looking at a commercial lease agreement, product delivery schedule, or manufacturing timeline, COVID-19 has probably disrupted your Philadelphia area business operations in one way or another.
What do you do when the disruptions caused by the novel coronavirus are so major that they fundamentally change your ability to perform on a contract? Is there any way to get out of your contract without being on the hook for the other party’s damages?
Enter force majeure, which means “major force” in French.
Force majeure describes an outside event or circumstance that makes the terms of your contract practically impossible to perform. Many contracts have a force majeure clause that excuses failures or delays in performance.
If your contract doesn’t include a force majeure clause, you can still be excused out of your obligations by arguing impossibility, impracticability, or frustration of purpose.
This is our fourth post in our COVID-19 series, where we discuss the challenges businesses face in a dramatically shifting economic landscape. You can also read about:
COVID-19 and Force Majeure Clauses
Depending on where your business operates in the Philadelphia area, you’ve had to keep up with an ever-shifting patchwork of state and local laws passed in response to the pandemic.
Not only are the many changing business requirements difficult to follow, but they're also out of your control. You may no longer use the beautiful new office space that you just signed. If your business is in person, your ability to earn income may be frozen while your rent comes due. If you’re in manufacturing, your supply chain may have dried up or skyrocketed in price. If you work in the event industry, your schedule might be completely erased.
Force majeure clauses usually contain language referring to “acts of God” that interrupt your ability to fulfill your side of the contract. Some causes remain vague, without stating what those circumstances might look like. Other force majeure clauses go into much more detail about what they cover and include a list of catastrophic events.
Your force majeure clause may cover fires, flooding, storms or other extreme weather, coup or revolution, acts of mass violence, riots or war, civil upheaval (but not labor strikes), and any other event “beyond the reasonable control” of either party to the contract. If a force majeure event occurs, your clause might specify whether you can:
Force majeure language referring to pandemics and outbreaks of disease tends to be rare, although that’s likely to change now with the effect of coronavirus on the world.
Will Your Force Majeure Clause Cover COVID-19?
That depends. If pandemics or disease outbreaks are covered under your force majeure clause, then you're in luck. But if your clause doesn't mention pandemics, the language would get reviewed by a judge whose interpretation is based on the laws in their local jurisdiction.
The more detailed and specific your force majeure clause, the more likely it is to be interpreted narrowly to cover only the events listed. For example, if your clause mentions ten different types of catastrophic events but leaves out pandemics, it may not apply to COVID after all.
On the other hand, the vaguer your force majeure language, the more broadly a court will interpret it in court. Does COVID-19 classify as an “act of God” beyond human control? Certainly, none of us a year ago could have reasonably predicted where the world is now. At this time, the pandemic is still too new for a court to have ruled on this question.
To successfully get out of a contract under force majeure, you must show that:
Unforeseen circumstances that simply make performance difficult or more expensive than expected do not fall under force majeure. If you wonder about the outcome of your case, that would depend on the specific facts of your situation.
An experienced local business lawyer can help you analyze the facts of your case and make the best argument for your company moving forward.
Impossibility, Impracticability, or Frustration of Purpose
If you have no contract or your contract doesn’t have a force majeure clause, you can argue impossibility, impracticability, or frustration of purpose to get out of your obligations. Both Pennsylvania and New Jersey courts recognize these doctrines.
Impossibility or Impracticability
Under common law, if your contract becomes impossible for you to perform, you can’t be held liable for breaching its terms. For example, it might be impossible for a dancer who suffers a broken leg to perform at the date and time specified in their contract.
Depending on your local government’s response to the pandemic, shutdown orders could actually make it impossible for some companies to do business. A local theater might be unable to operate their venue at any capacity under social distancing ordinances.
Under impracticability, you can argue that the terms of your contract have become “excessively burdensome” because of a supervening event that is:
A local business law attorney can look at the terms of your contract and help you determine what you can expect based on these arguments.
Frustration of Purpose
What if you can technically complete your contract but the terms have become meaningless?
Consider a company that contracts to clean an event venue that’s shut down during COVID-19. Technically, the contractor can still come and clean the venue. But the reason the cleaners were hired to begin with no longer applies since events are canceled.
In this case, a superseding event frustrates the purpose of the contract. Completing the contract in its original terms would be worthless.
At Holmes Business Law, our Philadelphia area attorneys are dedicated to helping businesses not just survive but thrive in a post-COVID world. We can help you understand your contract options and choose the best strategy to meet your goals.
We know you’ve worked hard to build your business to where it is today. The best way for your company to get through the coronavirus pandemic is with the support and guidance of a legal expert.
Call our business law firm today at 215-482-0285 for a consultation.
The coronavirus pandemic has upset nearly every aspect of the way the world does business. Most non-essential businesses in the Philadelphia area have started to operate remotely since the pandemic hit. Non-essential employees have been telecommuting from home. Many retail companies have shifted to delivery only.
Depending on the severity of local COVID-19 outbreaks, some non-essential businesses have even had to shut down completely under county or township law.
What do you do when you’re tied to a commercial lease for space you can no longer use? Many businesses have had to cut costs as revenue has fallen. A high rent payment on your balance sheet now could jeopardize your company’s survival.
Business owners facing these types of drastic changes are justified in wanting out of their commercial leases. Can you get out of your lease because of the pandemic?
The answer is: possibly. Most commercial leases require that you pay a penalty fee for early termination. But landlords haven’t been immune to the effects of the pandemic. If your commercial landlord faces a high number of vacancies with a low chance of finding new tenants anytime soon, they may be more willing to negotiate better lease terms for you.
Every commercial lease is unique. The only way to know your options is to go over the actual terms of your lease – preferably with the help of an experienced local business lawyer. Holmes Business Law Firm is dedicated to getting the best terms possible for our clients. Call the Philadelphia offices of Sarah Holmes today for a consultation at 215-482-0285.
Important Terms for Terminating Your Commercial LeaseWhen reviewing your commercial lease, look carefully at any language discussing how your lease could end. Clauses to look for include:
Your commercial landlord may be sophisticated and experienced, with many properties and lease agreements. They may be represented by professional property management companies. When approaching your landlord about terminating your commercial lease early, you must be prepared to back up your request with financial documentation and proof of hardship.
At the same time, you have to consider that your commercial landlord may not necessarily have deep pockets. They also have bills like payroll, utilities, and taxes. Their property may get foreclosed if they fail to make their mortgage payments on time.
As a result, a commercial lease early termination can be a delicate negotiation. Even if you've had a good relationship with your landlord in the past, you don't want to ruin it now.
To get the best results for your business, you should evaluate where you stand legally and financially with an experienced business lawyer. Consider:
Call our Philadelphia area law offices now at 215-482-0285 for a consultation with an experienced lawyer dedicated to helping your business thrive.
In this new video, Managing Attorney Sarah Holmes discusses what to consider when planning for your business in 2021.
Given the difficulties experienced by business owners in 2020, it can sometimes be hard to see how to plan for another year of potential uncertainty.
Learn how to spot opportunities arising over the next year and put together a plan for success.
In March 2020, the event ticketing website StubHub faced a tide of cancellations and schedule changes as the coronavirus spread across the United States.
In response, the company offered customers a choice: either receive a full refund or get company credit for 120% of the original ticket price. The opt-in was a success, with many customers choosing to get company credit over a refund.
Several days later, StubHub changed the terms of their policy. Instead of offering their customers refunds as an option, everyone would get the 120% company credit.
The first lawsuit was filed within a week, asking upwards of $5 million in refunds for all of the customers who were affected by the policy change.
It’s a business owner’s nightmare come to life.
If you haven't taken a look at your cancellation and rescheduling policies since the pandemic, the sooner you review them with a local business lawyer, the better. If you’ve never considered these policies at all before, you’ll want to do so now. A misstep in this shifting economy could prove costly to your business, your brand, and your professional reputation.
Cancellation and refund policies apply to more than just event-based companies. You may have to cancel orders or shipments based on global supply-chain disruptions. Your employees may be unable to reach originally promised project deadlines because of reduced staff hours. You may be a service provider who’s unable to see clients under local COVID-19 laws.
Even with all the uncertainty in the world, it's clear that the coronavirus is here to stay. As we round out the sixth month of the pandemic, the ride has been bumpy, chaotic, and unpredictable. The right legal precautions can help make the next six months smoother and set up your business for long-term success in a post-COVID world.
What to Consider in Cancellation & Rescheduling PoliciesWhen considering your cancellation and rescheduling policies, the first thing you should do is review your current contract. Your policies should be clearly stated with time limits.
What if you don’t have a contract or your contract doesn’t contain a cancellation or rescheduling policy? You can look at your industry’s commonly-accepted standards for a place to get started.
Your policy should answer the following four questions:
It's important to make these decisions thoughtfully, with long-term effects in mind. You have to balance customer expectations with your bottom line. Giving all your customers immediate refunds may leave your business cash-strapped or even bankrupt. But walking back on your policies may land you in the same legal trouble as StubHub.
Right now, brand trust and loyalty are more important than ever. Your dedicated customers could determine whether or not your business survives these turbulent times. The last thing you want to do is alienate them with poor business policies.
What About Force Majeure Contract Clauses?Your contract may already set out procedures in place for situations that are unforeseeable, unpredictable, and impossible. Many contracts include force majeure clauses that allow cancellation for “acts of God” beyond the control of the parties.
We’ll go deeper into force majeure clauses in a later blog post. But just because you have a force majeure clause doesn’t mean it automatically applies to the coronavirus. That ultimately depends on how the force majeure clause is written in your contract.
Generally, the more specific your force majeure clause, the more narrowly it gets interpreted. For example, your force majeure clause might cover specific types of disasters but fail to mention pandemics. That could leave you on the hook for fulfilling your contract even with the difficulties wrought by COVID-19. The only way to truly determine how your force majeure clause applies to you is to discuss it with an experienced local business lawyer.
Get Local Legal Help With a Philadelphia Business Lawyer
When considering COVID-19 policies for your business, it's important to consult with a local lawyer about your options. The pandemic response has varied by location, which means the laws in your locality could affect the rules by which your business operates. Your options may vary if your business is located in New Jersey compared to Philadelphia or other Pennsylvania counties like Bucks, Montgomery, Delaware, or Chester County.
Every case is fact-specific. Your cancellation and rescheduling policies may look different than businesses in other industries. In addition, your business has unique needs and operational challenges. Your customers have particular expectations. Working with a lawyer allows you to create policies tailor-made for your business, with your customers in mind.
At the Holmes Business Law Firm, our talented legal team will work with you to create a cancellation and rescheduling strategy that:
Call the Philadelphia offices of the Holmes Business Law Firm today at 215-482-0285 for a consultation with an experienced local business lawyer.
Emergency situations tend to bring out fight or flight behaviors. For business owners, covid-19 has certainly made many decide whether to fight or flee.
The economic toll of covid-19 and the lockdowns and business restrictions are going to have severe effects on business owners for years to come. Unfortunately, we hear from business owners every day about the devastation to their business, whether it's a default on their commercial lease, whether they can invoke force majeure in their contracts, or having to lay off staff.
However, every negative has a corresponding positive and sometimes it really is a mindset that makes the difference. We've been inspired by the number of current and potential business owners who see the current situation as an opportunity.
This includes purchasing a business. We've closed a number of business purchases for clients since the start of the pandemic. In fact, we've gotten a record number of calls for help with business purchases over the last few months. How could this be?
1) many sellers of businesses right now are at an age or stage in their ownership where they've quite honestly been looking for an excuse to sell or do something else; covid-19 is the perfect opportunity for them to get out;
2) many business owners that have been in business for a long time are too tired and exhausted to try and pivot their business business model; they know the kind of effort, dedication and financial burden it is to pivot and they just don't want to do it;
3) some business owners have reached a level of distress and need to sell, or they're going to have to dissolve the business.
These factors are good for buyers looking to invest in and purchase an ongoing business. There are a number of "famous" businesses going out of business every day. Can you imagine the value of purchasing a long-standing business with a name, reputation and customers already set for you? If you're already a business owner, there may be competitors out there looking to sell and you can really increase market share.
Our office helps people buy and sell businesses every day. Whether you're looking for help with a stock purchase agreement, asset purchase agreement, due diligence or even looking over a business plan, reach out to our office today for help. We offer convenient locations in center city or the main line.
There's never been a better time to buy a business.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer in Philadelphia, the Main Line or New Jersey, we can help.