Our business and entrepreneurship law practice group includes lawyers who provide legal advice and representation to businesses and corporations. We assist clients in a wide range of legal matters including:
- Business formation: we help clients form new businesses, such as corporations and limited liability companies (LLC), ensuring formation is in compliance with applicable law. After formation, we often prepare shareholders’ agreements, operating agreements and other foundational documents.
- Contract review and drafting: we structure, negotiate, review and draft contracts such as employment agreements, vendor agreements, lease agreements, website terms and conditions, license agreements and many other contracts. We ensure the contracts are legally binding to protect and promote our clients’ legal rights.
- Mergers and acquisitions: we assist our clients with buying and selling businesses, starting with due diligence and continuing through contract negotiation and closing the deal, as well as post-closing issues.
- Regulatory compliance: we advise clients on compliance with various laws and regulations such as those relating to employment, taxes, and environmental protection. We also commonly advise clients on local government rules and ordinances that may affect their operations and physical locations.
- Litigation: we represent clients in courts, mediations and arbitrations if a legal dispute arises. This is called business litigation or commercial litigation, and The Coppola Firm has experienced attorneys who forcefully represent our business clients in court when needed.
- Corporate governance: we advise our clients on internal corporate governance issues such as boards of directors’ and shareholders’ meetings, ensuring compliance with bylaws and operating agreements, and coordination with tax advisors on the application of tax law and other applicable laws and regulations.
Basic Differences Between Corporations and LLCs
Corporations and limited liability companies (LLCs) are separate and distinct business entities. And they have key differences in terms of structure, management and taxation.
Corporations. A corporation is a separate legal entity from its owners. It can enter into contracts, sue or be sued, and own property in its own name. Corporations have shareholders who own the company and elect a board of directors to oversee the company’s affairs. Corporations that have not elected to be taxed as “S” corporations are subject to double taxation, meaning that the corporation pays taxes on its income, and then the shareholders pay taxes on any dividends received from the corporation.
Limited Liability Companies (LLCs). An LLC is a hybrid legal entity that combines the personal liability protection of a corporation with the tax benefits of a partnership. LLCs have members, not shareholders. The members own membership interests, not shares of stock. They also have a manager rather than a president, although an LLC can dispense with a manager and just have the members run the company, typically by majority vote. Members of an LLC have limited liability, just as shareholders of a corporation do. LLCs can choose to be taxed as a corporation or a partnership, and in some cases will be treated as a pass-through entity for tax purposes. When taxed as a pass-through, the profits and losses are passed through to the members and are reported on their personal tax returns, avoiding the double taxation of a corporation.
Our attorneys work with our clients to determine which entity form best benefits the client, in advance, before the entity is formed, typically working collaboratively with a client’s tax advisor in making this determination.
Buying a Business
We regularly represent our business clients in the purchase of businesses. Some basic elements of these transactions are:
- Due diligence: We assist in conducting due diligence on the target company. This often includes reviewing the target company’s foundational documents, customer agreements, vendor contracts, intellectual property, and other relevant documents and information. It also often includes performing asset, lien and judgment searches on the seller and its assets to identify any liens requiring satisfaction at closing.
- Negotiating deal terms. We assist in negotiating the terms of the acquisition, such as purchase price adjustments, closing contingencies, representations and warranties and indemnification.
- Drafting and reviewing the purchase agreement. We draft purchase agreements and other legal documents such as non-disclosure agreements and letters of intent, for example, to maximize our client’s protection, promote its interests and minimize its risk.
- Structuring the acquisition. We advise our clients on the most appropriate structure for the acquisition such as an asset purchase, a stock purchase or a merger. We regularly work together with a client’s tax advisor and other consultants in this critical step.
- Legal Compliance. We advise our business clients on compliance with legal and regulatory requirements that affect their business and the acquisition itself. These laws and regulations can stem from State and/or federal legislation, so it is important to have an attorney who is experienced in both.
- Intellectual property and licensing agreements. Our attorneys review and advise on any intellectual property and licensing agreements of the target company, ensuring that our clients can assume them and that our clients understand the risks and obligations involved.
- Addressing post-closing issues. Our attorneys assist our clients in addressing the various post-closing issues that often arise. These can range from defective title to assets to breaches of representations or warranties to issues related to the integration of the target company into our client’s business.
- Assisting in the integration of the target company into our client’s business. We can assist our client in the integration of the target company into their business including legal and administrative tasks such as name change, registration with relevant State, local, and even federal authorities, and the transfer of licenses and permits.
The Due Diligence Process
Due diligence is the process of investigating and evaluating a business that is being considered for acquisition. The purpose of due diligence is to assess the legal, financial and operational condition of the target and identify any potential risks or issues that may impact the value of the business.
During the due diligence process, our attorneys and other professionals, such as tax advisors, will help our client obtain and review a wide range of information about the target business including:
- Financial Statements. We assist in obtaining the target’s financial statements for review and analysis by our client, its financial consultants and tax advisors. Where necessary, we assist with this review as needed to obtain clarity and identify potential legal risk.
- Legal and Compliance. Attorneys review the target’s legal and compliance records such as contracts, licenses, and permits to ensure that the company is in compliance with applicable laws, regulations, and ordinances. We also analyze any pending claims or litigation in which the target is involved.
- Operational and Management. Our attorneys assist in reviewing the target company’s operations such as its products, services, and supply chain, all to identify risk and quantify potential exposure for our clients.
- Intellectual Property. We review the target company’s intellectual property such as patents, trademarks, and copyrights to ensure that the company has legal rights to the intellectual property it uses.
- Environmental and Health & Safety. Our attorneys, along with professional consultants as necessary and advisable, assist in reviewing the target company’s environmental and health and safety records to ensure compliance with laws and regulations and identify any potential liabilities.
- Employee and Labor Matters. We review the target company’s employee records and data such as contracts, collective bargaining agreements, benefits plans, and other agreements to identify any potential liabilities relating to the workforce.
- IT and Cybersecurity. Along with professional experts, our attorneys provide assistance to our client’s IT professionals, as needed, to review the target company’s IT systems and cybersecurity protocols in order to assess the company’s ability to protect sensitive data from cyber threats.
The due diligence process can be time-consuming and, at times, expensive. However, it is an essential step in the acquisition process because it allows the buyer to make an informed decision about whether to proceed with the acquisition, and at what price. It is important to note that the scope and depth of due diligence depends largely on the target’s size, complexity and type of business as well as the laws and regulations relevant to both the target and acquiring companies.
Selling A Business
As with clients purchasing businesses, our attorneys also advise and represent clients who are selling their businesses. This can occur because the business has been made ready for sale, the owner is transitioning to a new line of business, or the owner wishes to retire.
We assist our clients in selling their businesses in a variety of ways, including:
- Reviewing and drafting the sale contract: Our attorneys regularly review sale contracts to ensure they are legally binding and that they both protect the selling client’s interests and minimize its liability exposure both during and after the sale.
- Assisting with due diligence. We often help our clients respond to due diligence requests by reviewing the documents in advance to ensure that all information provided is accurate and complete.
- Negotiating the terms of the sale. We often assist in negotiating the terms of the sale such as the purchase price adjustments, contingencies, representations and warranties and indemnification.
- Reviewing and resolving legal issues. If any legal issues arise during the sale process, we review and resolve these issues to ensure that the sale can proceed smoothly.
- Handling the closing process. Just as an attorney is needed for the buyer, an attorney is needed to represent the seller as well. When we represent a seller, we ensure that all necessary documents are finalized and signed, that our client receives the down payment or full purchase price, that all closing mechanics are resolved and that the transaction closes pursuant to the terms of the operative agreement.
- Assisting in the transfer of licenses and permits. We routinely help our client with the transfer of licenses and permits necessary for the business to continue operating after the sale.
- Assisting in the transition. Often the seller needs some help to ensure a smooth transition of the business to the new owner. We do this by handling any legal and administrative tasks that need to be done, swiftly, efficiently, and collegially to the greatest extent possible.
Stock Purchase & Asset Purchase Agreements
A stock purchase agreement and an asset purchase agreement are two different types of agreements used to complete a business acquisition. The main difference between the two is the nature of the assets being acquired and the liabilities assumed.
A stock purchase agreement is used when the buyer is acquiring the stock or shares of the target company. When a stock purchase agreement is used, the buyer is acquiring the target company as a whole, including all of its assets and liabilities. The target company remains in existence and continues to operate under its current name, but the buyer becomes the new owner of the company.
On the other hand, an asset purchase agreement is used when the buyer is acquiring only certain specific assets from the target company. Under an asset purchase agreement, the buyer only acquires the assets specified in the agreement and does not acquire the entire company. The buyer typically assumes only those liabilities, if any, related to the assets it is acquiring. The target company may or may not continue to operate under its current name, while the buyer may use the assets purchased to form a new entity or add them to their existing one.
It is important to note that the choice of which type of agreement to use will depend on the specific circumstances of the acquisition and the goals of the buyer and the seller. A stock purchase agreement may be more appropriate if the buyer wants to acquire the entire company and its existing customer base, while an asset purchase agreement may be more appropriate if the buyer only wants to acquire specific assets, such as a product line or real estate. Our attorneys work with our clients to determine the most favorable approach for their business. Reach out to us anytime online or call 716.839.9700.