Real estate investment trusts (REITs) are not typically something you’ll hear about unless you’re deep into the world of investment opportunities. They’re special companies that operate as trusts and oversee real estate investments. A company acting as a trust may sound strange, but this is how many large trusts work.
When someone with a lot of valuable property and capital places a significant amount of it in a trust, a group of people is continuously paid by the trust to maintain it. Sometimes they work to invest it to grow the contents of the account. A famous example of this would be the executors of the Tolkien Estate, a trust created to protect and maintain the property of the famous author J. R. R. Tolkien, writer of the Lord of the Rings book series.
Currently, Tolkien’s two main executors–Baillie Tolkien and Michael George Tolkien–and a team of lawyers and investors control and care for his estate. This is similar to how many REITs operate when put in simpler terms, but how it starts and benefits a regular investor is a different matter.
Who Creates a Real Estate Investment Trust?
A group of investors can come together or be broached by professionals to invest in real estate investment trusts. Regardless of whose idea it is, investors put money into a trust that purchases and operates real estate properties on their behalf. These investors can be wealthy individuals, investment firms, or large corporations.
What Are the Benefits of Investing With REITs?
REITs are perfect for when stock market investors want regular incomes. These allow investors to invest in nonresidential investments when they wouldn’t normally be able to. Real estate properties such as office buildings, mall complexes, and storefronts are usually impossible for individual investors to purchase themselves. With a REIT, they can.
What makes these trusts even more appealing to investors is that a REIT is what can be considered a highly liquid venture. These are exchange-traded trusts, where investors put liquid cash flow in and get liquid cash flow out. They don’t see real estate agents or title transfer companies if they don’t want to. To be safe, we would recommend that you have an attorney to oversee the title transfers and the contracts to protect your investments.
Investors also only have to be involved as much as they want, which is another reason to invest in a REIT. It operates like a business, meaning others run the day-to-day and only communicate with the investors when they need to put funding in or take the profit out. Though, again, we recommend that investors at least have their attorneys watching over any REITs they’re a part of.
What Can You Invest in With a REIT?
There are many different properties that can be purchased, managed, and sold by a REIT that should interest real estate investors. These include properties that would otherwise be near impossible for an individual investor to invest in themselves due to the time and money needed to make and keep them operational.
Apartment complexes
Healthcare facilities
Hotels
Data centers
Fiber cables
Office buildings
Cell towers
Energy pipelines
Retail centers
Self-storage
Timberland
Warehouses
Typically, a REIT will focus on one type of real estate, not all of these examples at once. Before you enter into any REITs, you want to make sure there’s a clear goal. It’s unlikely that there are many real estate managers who know how to manage apartment complexes, healthcare facilities, and cell towers. It’s not out of the realm of possibility that someone could manage retail centers and warehouses considering the connection between their businesses. They require business and legal research to make sure that your investment in a REIT is a safe one.
Contact Tressler & Associates Before Entering Any Real Estate Investment Trusts
A real estate investment trust is a good way to grow your portfolio and your capital, especially if you don’t have the time or energy to manage real estate properties yourself. But they aren’t bulletproof, so you need to make sure they’re with qualified investors and managers.
Our Tennessee real estate law firm has experience with writing and reviewing contracts and our estate planning attorney is well-versed in creating trusts. Additionally, our sister company, Tressler Title, is an experienced title search provider.
For any aspect of a real estate investment trust, contact Tressler & Associates today.
Tressler & Associates, PLLC, and Tressler Title, LLC are adding to their leadership team with the appointment of Megan Climer as Chief Marketing Officer.
Climer is a talented brand and marketing expert who brings nearly two decades of business to consumer expertise and experience with large and small organizations in marketing, communications, business development, public relations, advertising and brand innovation.
Todd Tressler is pleased about the company’s new addition.
“I am super excited Megan is joining our team,” Tressler said. “We have spent the last four years reshaping our organization for its next phase of success. Adding Megan to our leadership team is exactly the type of strategic growth we are ready for. She brings a diverse set of skills and talents along with an energy and attitude every business owner wants on their team. Having her take the reins of our marketing strategy will enable us to continue to grow and thrive in both the short and long term. Most importantly, Megan represents our team values and core beliefs which is a trait you simply can’t train someone to obtain. They either possess them or they don’t.”
As Tressler’s Chief Marketing Officer, Climer will lead all marketing, communication and development efforts, as well as the brand’s digital marketing initiatives. She will be responsible for developing and executing strategies that advance the Tressler brands and strengthen the company’s position as a trusted leader in the legal and real estate industries.
Climer is excited to join the Tressler team.
“I’m thrilled to be joining Tressler & Associates, PLLC and Tressler Title, LLC during this pivotal season of growth and vision,” Climer said. “I had the pleasure of working with Todd and his team as a strategic brand and marketing consultant in 2014. I admire all the work he has done to position his business for success. My entire career has been in marketing and development. I am grateful for each opportunity that has prepared me for this new leadership role.”
Climer most recently served on the Marketing and Communications team at Cumberland University, where she was responsible for driving the development, ideation and strategic planning of marketing solutions to develop and execute against the university’s long-term growth plan. This included a specific focus on brand strategy, brand building, offer development, creative ideation and design, messaging, media placement, and all related broad-reach communication.
Climer will report directly to Todd Tressler, Owner, and CEO of Tressler & Associates, PLLC and Tressler Title, LLC, and will serve on the Tressler leadership team.
You’ve spent months and months of your life preparing for your lawsuit. Whether it be against a former employer, a loved one, or even a stranger, it’s a long time to spend fighting someone for damages, and odds are, you’ll spend a lot more time until it’s over. At least you will until the defendant offers you a settlement to settle your lawsuit.
Settlement is when the defendant admits to some or all of the plaintiff’s claims and offers some kind of payment to avoid or end your litigation. Litigation is the name for the court process where legal teams make their arguments before a judge. Litigation is timely and costly for both sides, especially the losing side.
For this reason, it’s often cheaper for the defendant to offer a significant though smaller settlement amount to keep the case from going into litigation. They can also offer it during litigation to end it, but it takes a specific process to do so.
It’s not always in the plaintiff’s best interest to enter litigation, and there are situations when it’s better to settle a lawsuit. The settlement and litigation attorney at Tressler & Associates can explain.
In What Kind of Case Can You Settle a Lawsuit?
Lawsuits are filed only in civil cases, so you would settle in a criminal case. Plea deals are similar in concept but have several differences. Only specific government entities can file criminal charges against people and entities, and people can’t legally pay money to end a criminal investigation.
What’s the End Goal of Settling a Lawsuit?
When one American citizen or legal resident files a lawsuit, they are filing in civil court, and the suit becomes a civil case. In civil cases, the defendant cannot go to jail as a direct result of the case. Technically, they can be held in contempt of court if found to have committed a crime while on the stand or during litigation, but the judge will not send someone to jail or prison because they have lost a civil case.
In civil cases, the defendant can only pay or give the plaintiff property they owe them, property of monetary value, or money. It’s most common for the defendant to offer settlements with money or high monetary values. If you win your litigation or are offered a settlement, money is what you can expect.
Is it Better to Settle a Lawsuit Than to Litigate?
Whether or not it’s better to settle your lawsuit is up to your personal state of mind and your finances. If you cannot afford to fund a lawsuit through litigation, that would be an instance where it makes logical sense to settle. There are several common situations where litigation may be too taxing on your mind and heart, regardless of your financial situation. For this reason, there are several common instances where you should strongly consider a settlement over litigation.
When You Should Consider Settling Your Lawsuit
When your lawsuit is against someone close to you. In most civil cases, the defendant will try to defame the plaintiff to degrade their standing. This can be emotionally and mentally taxing when it’s your employer or even a stranger. When the lawsuit is against a loved one, it can be even worse. They know you better than most and will be able to supply their legal team with secrets and personal details that will emotionally break you down. For many people, a quality settlement and not having to go through this experience is worth missing on the larger financial awards of winning litigation.
When you can’t afford litigation. If you can’t afford to pay your attorney throughout litigation, win or lose, you should accept the settlement. Depending on the situation, you can’t assume an attorney will continue working for the promise of payment if you win.
When the potential earnings from litigation aren’t significant enough. Sometimes what you’re suing for is barely more than what you would get from the settlement. While you may be suing for $25,000, after all the legal fees and the time sunk into litigation, a settlement between $13,000 and $18,000 would have been better.
When your time is worth more than the money. Time is the currency no one can get more of. Once it’s spent, it’s gone, and many people do not want to spend years in litigation for the chance of more money. You can turn a lawsuit settlement into something larger than what you’re suing for, so it’s not necessarily worth the time that goes into litigation.
When you don’t know that you can win. No one ever truly knows for sure if they will, but sometimes you have such a strong case and are supported by precedent, so logic dictates that you should expect to win. If you proceed with litigation with a strong case, litigation will likely last shorter than normal. But if you don’t know that you can win, or that you’re likely to lose, the slim chance of victory should make you question whether or not to settle.
Contact Tressler & Associates for Help
If you’re about to file a lawsuit against a business partner, a loved one, or even a stranger to get compensation, consider the attorney at Tressler & Associates. Our attorney has experience with settlement and litigation in real estate law, corporate law, entrepreneurial law, and estate planning. This means we have a wide range of experiences and abilities.
So, if you need to file a lawsuit against a property seller, a previous employer, a would-be investor, or a wrongful inheritor, we’re the law firm for you. Contact us today for help building a case, and deciding whether to settle or litigate.
There’s never just one of anything. In contract law, this is especially true, and non-disclosure agreements (NDAs) are the perfect example of this. NDAs are contracts used by individuals and businesses to share private information safely. They legally bind individuals to share information with promises of confidentiality, save for a few exceptions. These can be shared with new and current employees, business partners, clients, and more. Anyone who might need to know a trade secret, a patent, or some other invention, should sign an NDA. But there are many types of NDAs, so you have to know which one is right for you.
The Three Tiers of NDAs
The different types of NDAs are broken down into tiers. At the top, there are three types, unilateral, bilateral, and multilateral NDAs. The rest of the specific NDA types fall under these three categories. Most are based on who has to sign the NDA. Not all NDAs are created equally, and they can only demand so much secrecy from strangers when compared to their employees.
Unilateral NDAs
To be a unilateral NDA, the NDA has to be one-way. This means that the business or individual is asking you to keep a secret, but isn’t keeping anything secret for you. Sometimes this happens because there is nothing that one side needs the other to keep private during their business arrangements. Sometimes it can also be because a business wants to release or use information from a case study and the NDA has to be one way to use information from it.
Employer-employee NDAs
It’s incredibly common for businesses to require employees to sign NDAs before they can start work. It’s common for businesses to have the intellectual property (IP) that they need to operate their business that also they don’t want their competitors to have. IP that would necessitate an employer-employee NDA contains:
Trade secrets
Patents
Business and development plans
Pricing data
Supply sources
Operation plans
Merchandising systems
Technical information such as projections and inventions
Stockholder information
Company-contractor NDAs
If you need to hire temporary contractors for a short-term project or to temporarily fill a spot, you’ll need an NDA. You can’t use the same unilateral NDA for employees as contractors because contractors aren’t your employees. They can be working with other companies while working with you. These other companies may be your competitors, or related to your competitors, so you need to have legal contracts designed for their situation.
Inventor-evaluator NDAs
When someone invents a patent or a prototype, they need NDAs to keep people from stealing their ideas.
Business Information: This includes the inventor’s financials, information on any vendors they use, the cost to develop the prototype, the cost to reproduce the prototype, and anything about the methods of conducting.
Customer Information: The names and contact information of any of the inventor’s customers.
Intellectual Property: This pertains to all parts of a prototype, including test data, test results, tools and services used in production, patents, copyrights, trade secrets, and unreleased marketing materials.
Service Information: All data relating to the inventor’s products and services that don’t count as IP.
Accounting Information: This includes balance sheets, company liability information, insurance coverage, expense reporting, profit, and loss reporting.
Seller-buyer NDAs
When you are selling a product directly to a buyer, you want to make sure that the buyer doesn’t reverse-engineer your product or give any important details to a competitor. A seller-buyer NDA will protect you by limiting one’s ability to share information on:
Business operations: This is the seller’s financial and internal information.
Intellectual property: IP in this instance is information relating to the seller’s research and development, and anything else having to do with their proprietary rights.
Production process: This includes all the processes used in the creation, manufacturing, and production of the seller’s process and services.
Computer technology: This includes all the technical and scientific information about any process or machine used by the seller.
Bilateral NDAs
These are also known as mutual or two-way NDAs, where both parties require the other to maintain a level of confidentiality. This is common in ongoing partnerships, specifically of the manufacturing kind. If a business needs a manufacturer to make their products and the manufacturer has a production process they want to keep private, a bilateral NDA is perfect for them. They’re also perfect for corporate takeovers, joint ventures, mergers, and acquisitions.
Multilateral NDAs
NDAs of this type include more than two parties. It doesn’t matter if it’s one, two, or all of the parties sharing confidential information, once there are more than two, it becomes a multilateral NDA. Many of the NDA types under unilateral agreements can be multilateral as long as only one party is sharing confidential information. If not, then these NDAs will most resemble bilateral NDAs where there are mutual promises and agreements to secrecy.
Contact Us for Help With All Types of NDAs
Our corporate law attorney has the experience needed to write any of your NDAs. Whether they’re with employees, buyers, sellers, or partners, we have the experience to make what you need. If you need someone to review an NDA that’s been given to your business or employees, we can review it to ensure you can realistically follow it. Contact our team today.
Loans and payouts aren’t only for incredibly wealthy and successful multi-billion dollar businesses. For small businesses, there is what is called a Small Business Administration loan, or an SBA loan for short. These loans are designed to support small businesses as they start and/or grow in profit and manpower.
What is the SBA?
The SBA, a U.S. agency that guarantees and oversees loans to small businesses, is designed to counsel and assist small business owners with growing their own businesses. They have tools and educational resources available, some for free and some not. These tools and resources include:
Loans: The agency itself doesn’t loan small businesses money but connects them to sources that do and oversee the loan process. These loans are issued by banks, credit unions, and other financial institutions that partner with the SBA.
Entrepreneurial Development: These counseling and training programs are provided by the SBA for a low cost. There’s no experience level required to take them, and they also have mentor programs that can connect new business owners to retired and existing entrepreneurs. There are over 1,800 locations that offer these services across the country.
Contracting: The SBA handles 23% of the U.S. government’s contracting dollars. They only give these contract dollars to small businesses that can provide a service or product for federal departments and agencies. 5% of the 23% is reserved for women-led businesses, 3% for disabled and veteran-led businesses, and the remaining 15% can go to anyone.
Advocacy: The SBA also works as an advocate for small businesses in the nation by reviewing legislation and pushing laws that serve the interests of small business owners.
What is an SBA Loan?
As mentioned, the SBA connects small businesses to loan providers and guarantees your loan. They only partner with verified loan providers that can be trusted to work with small businesses to succeed. The only time the SBA will loan out money themselves is to provide disaster relief.
Having a backed or guaranteed loan means that if the recipient defaults on it or can’t pay it on time, a third party will assume the debt. This means if a small business takes on an SBA loan and defaults on it, the SBA will have your back and take responsibility for the loan.
What Are the Types of SBA Loans?
Like any loan, there are multiple types that serve different purposes. Sometimes a business needs more money than others, and for different reasons. Because of this, the loans have different repayment schedules and different qualifications for loan approval. These SBA loan types include:
504 Loan: Also known as a Grow loan, this provides up to $5 million to a small business to buy assets the business needs to operate. This can include real estate property.
7(a) Loan: This is the SBA’s primary loan program. The maximum loan amount is $5 million and is commonly used for starting businesses.
Disaster Loans: These provide relief in the event of an uncontrollable disaster. This can include natural events like a storm, hurricane, and earthquake, or emergencies such as robberies, riots, and product recalls.
Having the backing of the SBA makes your business far more likely to receive a loan. The agency also allows businesses to make lower payments for a longer time period than loans without the backing of the SBA.
What Do You Need an Attorney For?
A common misconception about SBA loans is that if you fail to pay them, the SBA will cover them for you. You still have to pay the SBA instead, they’re just easier to handle and will charge your business less than another loan lender, but you still have to pay. What you should do in this situation is modify your repayment plan, and to do that with the loan lender or the SBA, you need an attorney.
To change your payment plan, or keep shady loan collectors off your back, contact the corporate law attorney at Tressler & Associates for help.
Starting a new business is exciting. It’s taking your life path and swerving off to make a new one for yourself. It’s not easy, either. To begin a new startup, you need funding, employees, a business plan, and a product or service. That’s just what a business needs to operate. When you consider the important business documents you need to start your business, there’s so much more.
You’re the entrepreneur, you know how to get everything you need to operate, but business documents are plentiful and complicated. Even if you have started a business before, one document of the same type rarely looks the same from industry to industry. To make sure that these documents are legal, cover their bases, and protect your business in the context of your state, consider having an entrepreneurial attorney draft or review them for you. It’s our job to understand and recognize the minute details of these documents.
What Important Business Documents Do All Startups Need?
The business documents that startup owners need to complete prove their ownership, establish control over their business, confirm funding, and inform the government what taxes the business should be paying. These are documents that they need to always have on file, and several have to be filed with the government.
#1. Founder and Partnership Agreements
Founders’ and partnership agreements are needed if your startup is being founded by multiple people. This can include original and primary investors, co-owners of the company’s original patent or copyright, and anyone else who is helping to build the foundation of the company.
Even if you are the only founder, you still would want this document because it establishes your leadership and responsibilities. While you can skip this agreement, you leave yourself open to potential lawsuits that this defends against.
#2. Intellectual Property Protection
While not all new businesses build themselves off an original intellectual property (IP) like a patent or trade secret, the ones that do need to protect that IP. If an original IP allows your startup to stand out from the competition, another business legally getting a hold of it would be devastating.
Intellectual property protections come in various forms. Trademarks and copyrights are the most common forms of IP protection, and you want to file them with the government as soon as possible so other companies can’t legally use your IP.
#3. Operating Agreements
Every business needs short-term and long-term goals. This agreement provides strategies and procedures while establishing the business’s goals. While this binds you to work towards these goals, it binds fellow founders and execs as well. A business can’t succeed if it’s run by people with different motives and ideas about success.
To create an operating agreement, you need to decide what types of business you’re going to file under. There are three types of businesses you can file as, and you need to establish which type to make a legal operating agreement, and for your taxes.
If you eventually find that an operating agreement’s short-term and long-term goals do not benefit your business, you can update or change them with an attorney’s help.
#4. Joint Venture Agreements
If your startup has a group of founders rather than just one, your startup might be considered a joint venture. A joint venture is whenever multiple parties or businesses come together for a business venture, and a new startup counts as one.
Having a few individuals doesn’t necessarily count as a joint venture. Talk to an attorney to see if your business qualifies. If your business does, then you need a joint venture agreement. This important business document will establish the needs and responsibilities each of you has to fulfill.
#5. Loan Promissory Notes
Unless you have the money to support a business yourself or capital from another investing business, you’ll need a loan to start your business. Loans can be to set up a place of business, order or create products, pay workers, and market your business.
It’s best to get these loans from banks, but before you can sign one, you need to create or receive a promissory note. These are legally binding contracts and you should have an attorney review them so you understand the consequences of a missed payment. It’s always risky when you’re starting a new business, but this way is especially. You’re the one taking on all the risk of your startup if it fails. Give yourself every edge and protection you can.
Contact the Entrepreneurial Attorney at Tressler & Associates
No contract is simple. They all have complicated legal jargon that can be confusing. Don’t let yourself get tricked into a bad contract that hurts your partnership, ownership, or ability to provide for yourself.
The entrepreneurial attorney at Tressler & Associates is available to create and review any of these business documents for you. Contact us today.
Most people don’t have the cash they need to start a business, so they get funding from lenders. If a small business owner has good enough credit and a good business plan, they can get funding from a bank loan. However, the bank often denies a startup a loan because they do not have strong enough collateral. This often leads to startups seeking funding from angel round financing or crowd-sourced financing.
But are these good alternatives? Sometimes small business owners will attempt one of these types of financing to get collateral for a bank loan, but is that a good idea? Both have their strengths and weaknesses and will work better for some startups than others. The entrepreneurial attorney at Tressler & Associates, PLLC can help you figure out which type of financing is best for you and what legal documents you need to attempt either.
The Pros & Cons of Angel Round Financing
Angel round financing is when a single or small group of high-net-worth individuals want to invest in a company. These individuals are called angel investors and make a profitby investing in shares of companies. They can later sell off their shares of the business for a profit or continuously profit off their share for years.
The Pros
Angel financing can produce more money. Depending on the worth of the angel investor, they may prefer to invest enough into your business that you don’t need a bank loan. This way, they can have a bigger stake and more profit while you take on less risk depending on the investor.
Angel financing is not a loan. While there are exceptions, it is uncommon for angel investors to treat their investment like a loan. They can seek a contract that says a small business owner will pay it back, but usually, angel investors don’t expect money to be repaid. They typically treat it as a business venture or investment that will lead to more money. This doesn’t happen if their investment is treated like a loan with minor interest.
Angel investors take on the risk. Since there’s no loan and the investment doesn’t have to be paid back, the risk on the business owner is lessened incredibly. If the business goes under, there’s no collateral other than the business itself. There’s also no bank breathing down your neck, damaging your credit score. While a failed business will affect your resume and portfolio, that’s something many would prefer over owing a bank after a failed business.
Angel investors are usually also business owners. Angel investors naturally want your business to succeed and are typically more than happy to provide advice, connections, and resources to help your business become successful. In many ways, an angel investor can be like a business partner.
Cons
Risk of more pressure while the business is operating. Ultimately, it doesn’t matter to a bank if you succeed or fail as long as you make your payments. They’re not going to pressure you to do well or change your business philosophy. An angel investor will, as they want you to succeed so they can get a profit. While having a business partner can be helpful, it can also be a pain if you have different business philosophies.
Angel investors have a controlling stake in your business. Where a bank cannot tell you how to run your business, an angel investor with shares in your company can. If you disagree and come into conflict on how to proceed, your business can stall.
The Pros & Cons of Crowd-Sourced Financing
Crowd-sourced financing is any funding you can get from donations from the general public. While going out and asking people for money isn’t feasible, online sites like Kickstarter, GoFundMe, IndieGoGo, and Patreon have made it easy for people to donate money. You can advertise your crowdfunding campaign on a budget and these sites will push them to help you find success. It’s not common for small businesses to fund their entire startup on crowd-sourced financing, but it’s how many have attracted investors or gained collateral for a bank loan.
Pros
You can choose whether your funding is equity-based. To be equity-based means that anyone who invests is investing for a portion of your business’s shares. Not all crowd-sourced financing options allow for this, but you can use one that does to reward investors for funding your business. At the same time, you can choose not to, so you don’t owe anyone anything but an attempt at starting your business.
Creates proof that there is a market for your business. When you start a business, it’s to offer a service or product. Investors are investing in the idea that people want to use that service or product. When you can’t presale a product before production, crowd-sourced financing can prove consumer interest. It’s hard to argue that there’s no market for your business when people are paying you without even getting the service or product.
You can use crowd-sourced financing at any time. You don’t have to attend conventions or make appointments with investors. With crowd-sourced financing, you decide when to ask for funding. This is useful when you need to attract investors, purchase collateral, or cover the surprise costs of starting a business. It’s a lot faster to start a Kickstarter campaign than it is to find an investor.
Cons
Fundraising is often limiting. Angel investors are usually incredibly well-off, enough so that if your business fails, they’ll make it out just fine. With crowd-sourced financing, you’re relying on the general public. There’s no guarantee that they’ll have the money you’re looking for or offer it to you. Crowd-sourced financing also rarely provides enough money to start a business. Its strength lies in covering costs or helping startups afford collateral for a bank loan.
Which is Best for Your Startup?
When it comes to angel round financing vs. crowd-sourced financing, it depends on how you feel about potentially taking on business partners. It’s unlikely that angel investors will just leave you to your own devices. If you feel your business can only succeed under your vision, you can’t do angel round financing, but if you welcome help, angel investors are the way to go.
If you wish to pursue crowd-sourced financing, your best option is to use it to collect collateral or prove to a bank that your business is a safe investment for a loan. Then you can run your business without outside interference as long as you pay back loan payments.
Why Do You Need an Attorney for Angel Round Financing & Crowd-Sourced Financing?
Whether you partner with angel investors or take out a loan, you need legal documentation protecting your rights to your business and the money you take. Failing to obtain documentation can use serious problems in the future, and potentially cause you to lose your business.
Even with crowd-sourced financing, you need to establish control, and how much power your supporters do or don’t have. For specifics on what documentation you need, how to create them, and how to file them, you need an experienced entrepreneurial attorney.
Contact Tressler & Associates, PLLC for Help
Starting a new business is something you have to take seriously. Once you know what kind of business you want to start, financing is the most important thing. Without money, you can’t start a business, but money can come with unwanted consequences.
Contact the entrepreneurial law attorney at Tressler & Associates, PLLC for help. We’ll help you make sure that your financing and your control over your business are protected.
Starting a business is one of the hardest things you will ever do, and running a business is a close second. Every day will bring new challenges but also new possibilities to improve and further your business. Some possibilities bring risks that can seriously hurt your business, but also catapult it into the stratosphere. One of these possibilities is buying a business.
You can buy a business for many reasons. Another business may have a patent or technology you need or help you improve your revenue by opening you up to another industry. One of the more exciting possibilities is buying a competitor to take control of the market and allow you to do more of what you already do. There are many reasons to consider buying a business, but with any large business venture comes risk.
If you’re planning to buy a business but are unsure of what risks you may take on, consider contacting an entrepreneurial law attorney. We can look into the legal requirements and risks that go into buying a company, taking into account the new business’s size, your current business’s size, both associated industries, and what the state(s) requires for such a purchase. The attorneys at Tressler & Associates are ready to help.
What Are the Risks When Buying a Business?
Let’s divide potential business purchases into two categories: buying a business in the same or similar industry as your business and buying a business in a different industry. Some risks apply to both, but some risks are only associated with one type of business purchase and not the other. Some universal risks include:
Onboarding Employees: Odds are that any business you purchase will not have the same company culture as yours. This means the employees have different work processes and work ethics. You have to either reconcile these differences with your business’s working process or transition them completely to yours. If management is up to this challenge, this can cause both businesses to stall and suffer.
Onboarding Customers: Even if you buy another business, you still have to remind its customers that you’re here to serve/sell to them. Customers won’t automatically understand that your business is the only one that can help them without you showing it. You need to have marketing blasts, public transitions, and constant contact with your new customers. You also have to do so in a way that abides by corporate law, especially while the purchase is still going through.
Gathering Capital: You have to have the capital to purchase a business like you would anything else. In most cases, businesses would take out loans rather than spend a large amount of their business savings. Getting a loan leads to the risk of being in debt should the business venture go array. It can even be the reason the business venture doesn’t have the chance to work out because you can’t pay back the loans or other investments you collected.
Keeping Track of Taxes: While the types of taxes may change depending on what kind of business you’re purchasing, you will have to pay more and track more. When you have to start filing as one entity together, or as two separate entities, is something attorneys and financial analysts can guide you through as time goes on.
IP Ownership: Once you settle the transfer of trademarks, copyrights, and patents to your business, you still have to deal with branding issues. This extends beyond marketing but having to own the various different combinations of your brand with your new businesses. You also have two brands you have to protect. Even if you completely rebrand the business you’re buying to be like yours, you still have to make sure that no one infringes on your purchase’s intellectual property.
Risks of Buying a Business in Your Industry
While there may be fewer problems with onboarding employees and customers since you know what they sell, there are more problems surrounding the purchase itself. If you’ve been paying attention to the news, company mergers are popular right now, with names big and small gobbling each other up and disrupting their industries.
A small business buying up another small business isn’t going to be as big a deal as Disney buying 20th Century Fox, but it may affect your local community. Competition is key to our economy on every level. If there are three businesses in the neighborhood competing for the same audience and one buys another, then the third can do something about it.
The Federal Trade Commission (FTC) has several laws and regulations about this. You can be investigated and need your purchase approved if your business is important enough to your local economy or someone else in the market has a problem with it. This means you have to contend with competitors and the government if you’re not careful about your purchase. To avoid these kinds of problems, extensive research needs to be done across multiple fields, especially entrepreneurial law.
Risks of Buying a Business Outside of Your Industry
While the government may be less inclined to keep you from entering a new industry, competitors may be more so. When you buy a business in another industry, you aren’t removing one of the competitors in that market unless you plan to shutter the business. This does mean that you’re giving your purchase a perceived advantage in the marketplace by giving them your investment. Competitors will see this as a threat and try to drive you out. Sellers may even decide not to work with you because you’re not a trusted veteran in the industry.
Not having connections, even as rivals, can make it difficult to be successful. No industry is welcoming to outsiders, and you may have many competitors and tangentially related companies who actively try to keep you out. This can lead to a purchase that has wasted your money.
The other issue is that when your business operates across multiple industries, there are more laws and regulations you have to follow. If you’re not familiar with everything you’re buying into, you need an attorney who can explain it. You will likely need legal professionals to review your decisions for years before you’re operating in perfect condition.
Consider the Risks with the Help of Tressler & Associates
We have several attorneys with experience helping businesses find success in their many different business ventures. Our attorneys review business documents, create them, and work with businesses to plan for the future as best we can. This way, your business is less likely to be slowed and threatened by a business risk you want to take. Buying another business is one prime example of how we can help.
For entrepreneurial attorneys who can help you through the process of buying another business, contact Tressler & Associates today.
Non-disclosure agreements (NDA) are designed to protect your business’s intellectual property. When you operate a business, you likely have some sort of business secret that lets you separate yourself from your competitors. These can relate to your business’s operating process, your product, or just your brand. These can take the form of trade secrets, copyrights, patents, or trademarks.
NDAs are for when you need to share these business secrets but also need who you’re sharing them with to keep them secret. When someone signs an NDA, they agree to never reveal the business secret, or at least not speak of it until a certain time. But NDAs aren’t a one-size fits all solution. There are instances where someone cannot sign an NDA, so you either have to change your plans so you don’t need this person anymore or need another way to ensure their secrecy.
If you don’t know when someone cannot sign an NDA, the entrepreneurial and corporate law attorneys at Tressler & Associates can help.
Who Can’t Sign an NDA?
When it comes to types of people who can’t sign NDAs, that are a few groups who make up a large portion of the population:
Minors
People with compromised mental faculties
Intoxicated individuals
Someone who already knows the contents of the NDA
Minors
A minor is anyone under the age of 18 years old. They are not adults in the eyes of the law and do not have the capacity to understand and sign binding contracts.
While it’s not technically illegal for a minor to sign on a dotted line, no contract they sign is legal and is null and void. It cannot be used against them even after they eventually turn 18. This means that if a child gets a hold of or hears of your business’s secret through legal means, they can’t be made to keep it a secret.
A Person with Compromised Mental Faculties
Someone with compromised mental faculties would be considered someone who cannot make decisions for themselves. This can be due to mental disabilities, traumatic brain injury, or being in a coma. They cannot safely make decisions for themselves so they also cannot sign a contract. If they have a conservatorship, that person may be able to sign for them in certain situations.
Intoxicated Individuals
Anyone under the influence of alcohol or drugs cannot sign legally binding contracts. This means it is important to verify the mental condition of whoever you want to sign an NDA. If they can prove that they were under the influence when they signed the NDA, it can become null and void, while they still know your business’s secret(s).
Informed or Potentially Informed Persons
A person cannot be forced to sign an NDA for information they already know. This situation occurs when they have learned your business’s secrets:
Prior to being presented with the NDA
From a third party on a non-confidential basis
From reverse engineering a product or device
If you accidentally reveal important information to someone before they sign an NDA, any NDA they sign to keep that specific information secret is null and void. You can still have them sign NDAs for related information they don’t know yet.
For example, if they find out about a new product you have, you can have them sign an NDA about the contents or process of making the product. This way if they explain what they already knew, they’re likely to break the NDA for what they found out.
This same legal logic also applies to anything in the public domain. While someone may not know the specifics of what is in the public domain, they could have learned about it before they were asked to sign an NDA. They cannot sign an NDA to keep secret what they–or anyone–could know before they were shown the NDA.
Contact Tressler & Associates When Someone Can’t Sign Your NDA
Tressler & Associates can help you write airtight NDAs and other business documents. When someone can’t sign an NDA, there are other documents that can make them legally obligated to protect your business’s intellectual property. That’s just one of the solutions we can offer to help your business. For more information and a consultation, contact us today.
