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Lay It All On The Table When Selling a Business

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Sales & Dissolutions on Monday, March 21, 2016.

Businesses change hands all the time in California and throughout the nation. Typically, every company owner’s reasons for selling a business are unique to an individual situation. Various legal challenges may arise in the course of such transactions that are best dealt with alongside experienced guidance.

Business owners are advised to “lay it all on the table” when discussing deals with potential buyers. Otherwise known as “full disclosure,” it is often best to be upfront in terms of any troubling issues that may affect a prospective buyer’s decision. Being honest regarding any flaws that exist within a business provides the clarity a potential new owner needs to make informed choices.

Some experts say that being transparent and sharing the bad along with the good helps build trust and credibility that can boost negotiations. Consequently, trying to conceal negative business details may actually backfire and prevent a deal from taking place at all should a buyer learn that a current owner was less than forthright when providing information. Details about inventory backlog, financial crises or any number of other important issues may impact a potential buyer’s decision.

Depending on the size of a California company and various other issues involved in selling a business, an owner or potential buyer may find it helpful to seek assistance from a business and commercial law attorney before negotiating a deal. An experienced lawyer can help make certain that the client clearly understand the legal terms and obligations included in a business sale contract. Allowing an attorney to act on one’s behalf often ensures that one’s business interests are protected and all available options are explored to accomplish immediate and long-term business goals.

Source: postcrescent.com, “Go ugly early when selling a business“, Scott Bushkie, March 12, 2016

backlog, business sale, inventory, Sales & Dissolutions, transparency

Checklist for Business Dissolution Can Help Ease the Process

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Sales & Dissolutions on Thursday, December 4, 2014.

When a company owner decides — for whatever the reason — it is time to close up shop, something that seems should be such a simple process can actually be quite complex. Certain guidelines for business dissolution may apply, and those that do must be followed to ensure a smooth completion of the process. Creating a checklist of all procedures that apply to California businesses can provide owners with a simple and straightforward guide, which can be used to ensure everything is handled appropriately.

The size of a business can certainly change the number of steps that must be followed before doors are officially closed. Owners of large corporations or bigger businesses simply may be required to handle more than those of smaller companies. However, there are some procedures that are required regardless of company size, some of these could include:

Filing appropriate IRS forms
Collecting assets
Resolving debts
Publishing notice of intent to dissolve
Filing any necessary documents with the state tax authority

These procedures are just a few of many that may apply to closing out certain businesses. An experienced business law attorney can help by providing a list of state requirements that are specific for any business type. Along with providing assistance in creating a procedural checklist, an attorney can ensure all legal bases are covered so business owners can close out their company with as few legal issues as possible.

Business law attorneys are available to help company owners in California through every stage of business ownership — from opening and operating to closing up shop. While business dissolution can be complex, it doesn’t mean the whole process has to be a nightmare. Creating a procedural checklist and seeking legal assistance, when needed, can make the process easier to handle.

Source: FindLaw, “Dissolution and Winding Up Checklist“, Dec. 4, 2014

closing a business, Sales & Dissolutions

Common Reasons Tech Business Startup Firms Fail in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Wednesday, October 1, 2014.

Business is all about planning ahead. This is definitely true in the technology industry. Not only does planning ahead include an effective marketing plan and efficient operations plan, it also makes sure that business-planning strategies avoid some of the most common mistakes made by entrepreneurs in the technology startup industry in California. Doing so can ultimately make the difference between success and failure for a technology business startup.

One of the main reasons that technology startup ideas end up failing is that there is no need for the service in the marketplace. A recent survey revealed that 42 percent of firms failed due to failure to identify a target market. The more detailed a profile that a firm has for its target market, the more clearly the firm will be able to direct its resources and marketing efforts.

Another common mistake made by technology startups is having inefficient working capital. Almost 30 percent of technology firms failed due to not having enough cash to continue operations. Therefore, it is best to spend time in the beginning fundraising phases to ensure that a new company will start operations with a healthy amount of liquidity. This can allow business owners to have the flexibility needed during the startup phase, while also enabling firms to spend funds more effectively and strategically.

However, the best marketing strategy and operations plan may be useless if a business startup is not properly formed. This means that the company will have to comply with applicable rules and regulations specific to the new firm’s industry. Also, the correct legal paperwork will have to be submitted to the proper California regulating agencies.

Source: Baltimore Business Journal, “5 reasons your tech startup is likely to fail“, Sarah Gantz, Sept. 29, 2014

business failures, Business Formation & Planning, planning to fail, tech startups

Business Dissolution May Not Be Bad News in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Sales & Dissolutions on Tuesday, December 10, 2013.

Usually, when a business shuts down it is bad news for the company, its owners and its executives. This generally means that the business did not produce enough profit to survive in California or in any other state. However, one company’s recent business dissolution announcement is actually being received as good news by many in the company as well as the company’s business partners.

The company, American Car Care Centers Inc. (ACCC), is one of the largest groups in North America that is designed to serve the interests of tire dealers. The company recently announced that it will dissolve the business organization by the end of Jan. 2014. The marketing organization represents 16 tire dealer companies, which are also considered shareholders in the corporate entity.

ACCC stated that changes in industry dynamics prompted the board of directors to dissolve the company. However, the company’s President and CEO explains that the decision to end the business is a sign of success. He said that the decision to dissolve is based upon member distributors outgrowing the organization’s structure. Therefore, the member distributors have benefited from being involved in the organization, which means the ACCC succeeded in its mission.

On the other hand, companies in California or in any other state which decide to initiate business dissolution usually do so because they were not able to turn their struggling businesses around for one reason or another. Many times this is caused by drastic changes in the economy which may be out of the hands of the business owners. However, this also does not have to be bad news since this will allow the business owner to move on to the next chapter in his or her life.

Source: Tire Business, ACCC to dissolve; group’s member distributors ‘outgrow’ structure, Dave Zielasko, Dec. 6, 2013

closing a business, Dissolution, Sales & Dissolutions