Articles Posted in Business Transactions

Fotolia_79495533_Subscription_Monthly_M-300x200Any business that deals with customers – meaning all businesses – has customers that are habitually slow to pay for the goods or services that they purchase. Unlike retail transactions such as those that occur at a grocery store, many business-to-business transactions are not immediately completed. Customers don’t necessarily have to pay before the goods or services leave the building. Payment terms might be 30 days net or 60 days net, but the customer has time to pay for what they have purchased. But what can you do when those 30 or 60 days pass by without a payment? And what can you do if that time continues to drag on and months go by without a payment from your customer?

Don’t Delay with Delinquent Customers

There are many reasons – and excuses – for delayed payments or nonpayment by customers. If you invoice by mail, it is possible that the invoice was not delivered, or that it was lost internally at the customer’s business. Depending upon the size of the business, it is possible that no one at the customer’s business knows that a bill has not been paid. Reasons and excuses aside, your business cannot afford to operate without being paid.

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Mergers in the tech world are quite common. In a merger, one or more companies combine to form a new company (i.e., legal entity). Mergers can be complex and have many moving parts. The transaction can often include legal documents, valuation, key deliverables, operational logistics, regulatory matters, and financing and payments. A Silicon Valley M&A attorney can assist with your merger M&A transaction and handle multiple facets of the transaction.

Structuring the M&A Transaction

A merger and/or acquisition is a term that can be used to represent several types of transactions. Some M&A transactions might include:

Fotolia_172702870_Subscription_Monthly_M-1-300x187Successful merger and acquisition (M&A) transactions often rely on how well the parties involved communicate and how efficiently they can complete negotiations and due diligence. There are many steps that have to occur from initial interest in an M&A to full signature, payment, and completion of the transaction. Both parties, the buyer(s) and the seller(s), need to make sure the transaction is mutually beneficial. The Letter of Intent is one important step in this process.

Purpose of an LOI

The first step in formalizing any M&A transaction is usually a Letter of Intent (LOI). This document can sometimes also be called a Memorandum of Understanding (MOU). The LOI is a written document that outlines the buyer’s initial intentions and may include pertinent information and conditions related to the transaction. The delivery of an LOI to another party presents the seller’s intentions and begins potential negotiations. If you are the party issuing an LOI, you will want to make sure your letter is professional, clearly communicates your intentions, and sets forth realistic expectations. An experienced M&A attorney can assist in the drafting of your LOI.

Fotolia_171059478_Subscription_Monthly_M-300x200A right of first refusal is an important legal right in business law. It gives a certain party the opportunity to engage in a transaction before another party can do so. The right of first refusal can be used in many different contexts and can be extremely important for many companies. If a right of first refusal is granted and not subsequently honored, it can lead to a legal dispute.

If you are including a right of first refusal provision in a contract, you should always have a skilled business lawyer review the contract to ensure the provision properly protects your rights. We can also ensure the contract allows you the appropriate remedies should another party breach the contract provision.

Situations Involving a Right of First Refusal

Fotolia_180008799_Subscription_Monthly_M-300x200Startup companies often use stock options to attract new quality talent. If you have decided to do so, there are some special considerations when deciding the best approach to compensate your employees. Two common approaches include restricted stock and stock options.

What is Restricted Stock?

Restricted stock is a stock plan that gives particular employees a right to purchase stock shares. These restricted shares may be at a discounted value, fair market value, or even at no cost. Despite the right to buy the restricted stock, the shares are not actually owned by the employee until a particular triggering event occurs. For example, a company may restrict the transfer of the stock until a particular amount of time has elapsed (e.g., three years from the date of hire). Another example would be a condition regarding company performance (e.g., $1m in gross revenue). The employee then takes possession after the triggering event occurs, thereby lifting the “restriction” on the stock.

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Securities law is something you might hear in the news because of some violation or in relation to white-collar crime. With the wild ride that the stock market, including the gradual introduction of permissible, legal trading of cryptocurrencies (like bitcoin) and tokens from initial coin offerings (“ICO’s”), has securities laws a popular, researched and well-debated topic among entrepreneurs, businesses, investors, lawyers, and regulators. But, what are these laws? Securities laws are detailed and complex laws that govern securities. Below, we discuss some of the basic concepts of securities laws. For more information, contact a Mountain View transctional attorney today.

Understanding Securities

A security is a common word used in investment circles. It is a broad term that refers to the instrument used in certain transactions, financing or investments that are sold in various financial markets. The Supreme Court uses the Howey Test to determine whether a transaction represents and investment contract (and thus a security) by using the following definition of when an investment contract is a security: “a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.” Examples of securities include:

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Palo Alto business owners are faced with heavy competition in the Silicon Valley, all of which are looking for the best practices, methods, and trade secrets. Some of a company’s most valuable assets can be found in your intellectual property. Each year intellectual property theft costs businesses billions of dollars. If you think your intellectual property might be at risk of being stolen or you can confirm it has been stolen, you need to act fast.

Different Types of Intellectual Property

In order to protect yourself from Intellectual Property theft, a business owner must first define what they need to protect. For example, if the business owners want to secure a method of a certain process, a formula specific to their company, or even lock down a logo and name to fight off competition, there will be different applicable forms of legal protection to consider and utilize. There are several forms of protection, some of them being:

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In the tech-rich culture of San Jose, protection of intellectual property and consumer data is a constant concern for business owners. How can owners invoke legal protection for these assets in order to protect their legal interests and reassure customers that their data is secure? The answer depends upon the different types of liability a business can face when consumer data is compromised.

Contractual Liability

Contractual liability arises when one (or more) parties in a contract fail to fulfill their responsibilities agreed upon in the contract. Many technology companies have contracts with consumers. These are often contained in the Terms of Service issued to users of mobile apps or software. Some can be more detailed – especially when the company is hired to perform a specific service to the customer. For example, when a company provides customers with secure data storage based on a private server or the cloud, the Terms of Service are typically very inclusive. If such consumer data is compromised, a technology company can face contractual liability for failing to provide the secure data storage offered by the terms of the contract.

Fotolia_183822998_Subscription_Monthly_M-300x176Many San Jose business owners find themselves embroiled in legal disputes with vendors, clients, employees, contractors, and other business relationships. It is highly likely that a legal dispute will arise at some point during your business operations. It can be difficult to know how to resolve such a dispute. Litigation can subject a business to unnecessary time, effort, and costs which will not always be reimbursed after a trial. Yet in some cases, litigation remains the only method of effectively preserving important legal rights.

Mediation and arbitration provides clients with the ability to settle their claims quicker and for less expense. However, one of the biggest cons of mediation and arbitration is the fact that neither party will be totally satisfied as the result of settlements is a compromise.

The experienced San Jose corporate attorneys at Structure Law Group have extensive experience in litigation, mediation, and arbitration.They can help you determine how best to protect your financial and legal interests in a business.

Fotolia_92329578_Subscription_Monthly_M-300x213Despite the fact that everyone is entitled to their day in the court, the reality is that most cases do not make it to trial.  Many clients will approach their lawyers with the hope that they will be able to quickly get in front of a judge and explain their story—a vision of American justice that is reinforced in popular media and Court TV.  However, the reality is that it takes a long time to get to the point when a party can tell its story directly to a Judge.  In most situations, the cases take earlier exit ramps, such as informal out-of-court settlement, non-binding mediation, binding arbitration, or a ruling by the Court before trial.  If a case does make it to trial, the parties often settle on its eve.  Often, the cheapest and most efficient way for a dispute to get resolved is for attorneys to work on an out-of-court settlement.  This can occur at any point either before or after a lawsuit has been filed.  Under this track, attorneys informally negotiate a resolution.  If the parties agree to it, the attorneys will memorialize the resolution in a settlement agreement.  This is often the quickest way to resolve a case, as it does not require any third-party intervention—it only requires parties who are willing to work together to settle their differences and capable counsel to guide the parties through the process.

In addition to out-of-court settlements, cases often get resolved with the help of a third-party neutral.  The decision of this third-party may be binding depending on the posture of each case.  For instance, cases often go to non-binding mediation before they move on to trial.  Indeed, more and more courts are requiring this step before allowing the case to move to trial.  With a non-binding mediation, the parties all present their cases to a neutral, who tries to facilitate a settlement agreement.  In short, non-binding mediation is like the informal out-of-court settlement discussed in the previous paragraph, with the addition of a third-party neutral who helps ease things along. Sometimes, cases may end up in front of a third-party neutral who has the authority to make a binding decision.  For instance, if the parties previously signed an agreement for binding arbitration, the case may end up in front of a private judge whose decision is final.  In other instances, the parties decide to submit their case to binding arbitration at the time of the lawsuit for a variety of reasons, such as cost and efficiency. If the case does actually end up in court, it is still unlikely to reach trial.  The purpose of trial is to get to the truth of what actually happened in a conflict, so if there is no dispute about what actually happened, a judge might rule on the case early based on a dispositive motion like a summary judgment motion.  With a summary judgment motion, the moving party argues that there is no dispute of fact in the case, so the judge has no finding of fact to make in a trial and can proceed to a ruling earlier. If a party brings a summary judgment motion, it has the burden of providing evidence that there is not any dispute of fact in the case.  This evidence may come in a variety of forms, including affidavits, declarations, and discovery responses.  If a judge is persuaded, it may decide to rule on the case right there. As you can see, getting to trial is an involved and lengthy process with the potential for a lot of different early exit ramps.  If a case does make it all the way through the end of trial, it may take a long while to do so.  For instance, a timeline of one year would be a relatively quick timeline in most cases, and it is not uncommon for cases to take several years to make it from beginning to end.

Contact the Experienced California Business Litigation Attorneys at Structure Law Group