Latest Blog Posts under "Business Law" Oshkosh, Wisconsin full service law firm with attorneys specializing in Estate Planning, Employment Law, Business Law, Tax Law and Litigation Mon, 25 Sep 2017 11:39:52 +0000 Joomla! - Open Source Content Management en-gb A Great Time to Sell Your Business

Thinking of selling your business? Of course not. Our economy is in a significant recession, credit is tight, markets are down, and buyers are scarce. But, it is an excellent time to start thinking about selling your business, if that is consistent with your long-term plan. There are several questions that you should ask yourself now – in anticipation of the economy rebounding – so that you are well prepared and in a position to act quickly when the time comes. Our experienced lawyers can assist you with determining the right questions to ask and how to prepare to cash out and maximize the value of years of your sweat equity.

Things to Keep in Mind:

There are several things you should keep in mind when you decide to move forward with a sale. Arriving at the difficult decision to sell is just the beginning. Preparing your company for sale requires an exit strategy set up months and, perhaps, years in advance. If you have been a careful planner, you likely have a succession plan in place, or at least the outline of your sale strategy. Thinking through a sale now, while you have ample time, will almost always pay big dividends down the road.

What is Your Company Worth?

What is your company worth in today’s market? And more importantly, what may it be worth in a better market when you are prepared to sell? There is no handy formula that can neatly and accurately predict a business’ value. Most private transactions are based on a multiple of cash flow. There are other methods as well, but if your company has a stable cash flow, that is a good starting point. You can also pay attention to what the market says other businesses comparable to yours are worth. Although there are often few direct comparables, similar business of similar size can be a helpful predictor. Gather as much data as you can about sales of businesses in your area. Trade associations and business groups also sometimes have very good data on how their members’ businesses are valued.

More Profit or More Taxes?

Look closely at how you are running your business and paying your taxes. Small companies often reduce profits so that they pay less taxes. If you show more profit and pay the tax on it now, you will be more than compensated for it with a higher valuation later. Also, if you are running any expenses through your business now that either the IRS or a potential buyer may question, now is the time to identify these items and plan to phase them out.

Financial Statements

You may also want to invest in either audited financial statements or, at least, financial statement reviews by a reputable accounting firm. Audited statements provide a potential buyer with a level of comfort that could translate into lower deal costs and a higher purchase price for you, with less chance of a future claim that your financial statements did not properly represent the financial results of the business.

Pending Lawsuits

This is also a good time to resolve any lawsuits or potential lawsuits involving your business, since any potential buyer will be keenly interested in any litigation where your business is the plaintiff or the defendant. Legal strategies and settlements are sometimes complicated and require time to set up, so planning now to extricate your business from any pending litigation will make things easier later.

Selecting Your Deal Team

You may think you can sell your business on your own, but the prudent owner recognizes the value that a team around him or her can provide. At a minimum, you will want your lawyer and your CPA with you from the beginning. Depending on the circumstances, you may also want to consider a deal advisor or business broker. The type of advisor you may add will likely depend on the size of the deal. Smaller deals may benefit from the use of a business broker, particularly where the broker knows the type of business and has a ready list of contacts. Usually, brokers are paid on commission, on a sliding scale basis. Larger deals may require the services of a regional investment banking firm. Often these arrangements call for a cash retainer and a success fee based on a percentage of the purchase price. They can be expensive, but offer you the benefit of significant experience, resources, and obtaining multiple bids or purchasers. After you and your team have determined a targeted price range for your business, you should then develop a list of targeted buyers. You may already know of someone who has expressed an interest. You may know of strategic buyers that can see the benefits and synergies that might come from the acquisition of your business.

After the Sale

Lastly, you may want to think preliminarily about what you want to do after the sale. Do you want to have a role in the business after it is sold? Do you want to buy a boat and sail around the world? Often, if the buyer does not have the knowledge, they may be willing to pay a premium to retain you in the business, either as an employee or consultant. Most buyers desire the seller to remain for a period of time to “transition” the business. This may range from a few months to a year or more.

Plan for Success

Timing of your sale is critical. You want to sell in an up market, with up trends. However, now is the time to plan to meet that goal.

Our experienced lawyers can assist you with every phase of your planning and sale, be it pre-sale planning and advice, tax advice, pre-deal legal audits, real estate advice, or assisting with an offering memorandum, letter of intent, purchase and sale agreement, or other deal documents.

For more details, or if you would like to discuss selling (or buying) a business, please contact one the lawyers in our business practice group.

]]> (Jeanna Rasmussen) Business Law Thu, 03 Sep 2009 00:00:00 +0000
New Standard for Non-Compete Clauses

The Wisconsin Supreme Court adopted new standards that tend to save contracts designed to prevent ex-employees from competing with their former employers. In Star Direct v. Dal Pra, the Court determined that portions of a restrictive covenant may be enforced even after another section is deemed unenforceable, so long as the surviving provisions remain understandable and capable of independent enforcement. Although restrictive covenants are generally disfavored, non-compete agreements are lawful if the restriction is “reasonably necessary for the protection of the employer.” The employer must show a legitimate protectable interest.

Dal Pra, the employer had restrictions covering ex-employees competing with its business (“business clause”), contacting its customers (“customer clause”), and protecting proprietary information (“confidentiality clause”). The Court found that Star Direct had a protectable interest in the special knowledge of its business practices and customers accessed by its salespeople. Although two clauses were held to be overbroad because they prevented an ex-employee from competing in a business “substantially similar to” Star Direct, the confidentiality clause was held to be reasonable.

The question for the Court, based on precedent, was whether all three clauses should fail because at least one clause had failed. The answer was a new standard: “Whether, if the unreasonable portion is stricken, the other provision or provisions may be understood and independently enforced.” The answer in

What does this mean for employers? The Supreme Court has now given employers in Wisconsin an even better chance of successfully enforcing a non-compete clause with a former employee.

Our experienced lawyers can assist you with planning, drafting and implementing non-compete provisions if you believe that they are necessary to protect your business.

For more details, or if you have any questions, please feel free to contact any of our lawyers to see if you can gain through our experience.

]]> (Jeanna Rasmussen) Business Law Thu, 03 Sep 2009 00:00:00 +0000
Keys for Successful Non-Compete Clauses:

1. Have a legitimate business need

2. Be reasonable in terms of time, customers and geography

3. Be as specific as possible

4. Provide reasonable cash or benefits to the employee in return for the non-compete

]]> (Jeanna Rasmussen) Business Law Thu, 03 Sep 2009 00:00:00 +0000
Employing Your Children

If you own a business, you may want to employ your children. Not only will this provide them with valuable work experience, but it presents a way for you to offset some of your own income. But the IRS may closely scrutinize these payments. So what can you do to avoid the IRS finding a deficiency during an audit which may result in additional tax, penalities and interest?

In general, if you wouldn’t compensate a non-child employee in the way you plan on compensating your child, you need to take a look at a number of factors. You should attempt to treat your child, to as great an extent as possible, like any other employee. For instance, failure to actually give your child the money, and put it in their own bank account, or making payments at opportune times, such as holidays, birthdays, and dates when tuition is due, can be very damaging. If you fail to provide a detailed arrangement or formula for compensation, the IRS may also disapprove. Not keeping adequate, contemporaneous records of the child’s hours worked and the tasks competed can potentially destroy the arrangement in and of itself. Failing to pay employment taxes and file returns on behalft of your child is also viewed negatively. And remember, wages must be “age appropriate.”

If you would like to discuss this tax matter or any others, our tax specialists would be more than happy to assist you so that you can, to the greatest extent possible, avoid potentially expensive tax bills in the future.

]]> (Jeanna Rasmussen) Business Law Thu, 03 Sep 2009 00:00:00 +0000
Your Rights as a Landlord

In a University town such as Oshkosh, many property owners wish to make a return on their investment by renting out homes and apartments to college students. However, before making the leap and becoming a landlord, it is important to know not only what is expected of you, but what to expect from your tenants.

Prohibited Lease Provisions

While a landlord and tenant may personalize a rental agreement, there are certain provisions prohibited by Wisconsin law. A residential lease may not establish eviction procedures other than a judicial proceeding, require that the tenant pay the landlord’s legal fees, relieve the landlord from liability for the landlord’s negligent acts or omissions, impose liability on the tenant for events clearly arising outside of the tenant’s control, or waive statutory obligations of a of a landlord. Also, a residential lease may not accelerate a tenant’s rental payments if the tenant fails to timely pay rent, or breaches an obligation of the lease.

A residential lease may not provide that, if a tenant contacts law enforcement, health, or safety services, the landlord will have the right to refuse to renew the lease, increase rent, decrease services, or bring an action for possession of the premises. A lease is void if any of these provisions are present. Even a provision threatening such an action will void the entire lease.

As a result, you may wish to have one of our attorneys look over your proposed residential lease to avoid the inclusion of any of these provisions that could threaten your investment.

Responsibility to Maintain the Premises

A residential landlord is required by law to keep any area of the premises under the landlord’s control in a reasonable state of repair. If providing services to a tenant such as heat, a landlord must also repair all equipment that supplies such services. A residential landlord is also responsible for making all necessary structural repairs to the premises. However, the landlord is not responsible for repairs resulting from damage due to the tenant’s negligence or improper use of the premises. It is important for a landlord to perform all required repairs. If the landlord fails to fulfill this duty and the failure substantially affects the health or safety of the tenant, the tenant is justified in vacating the premises.

If this occurs, the tenant is no longer bound by the lease, and does not have to pay any rent for the time remaining on the lease. Therefore, it is important to ensure the premises you are renting are in good condition in order to get a full return on your investment.

Returning Security Deposits

A security deposit must be returned to a former tenant within 21 days after the tenant vacates the premises. The deposit may be delivered or mailed to the former tenant. A landlord may retain the security deposit to cover any unpaid rent, utility bills that the tenant is responsible for under the lease, or utility bills provided by a government-owned utility for which the landlord will become liable. In addition, if the tenant has damaged the premises, a landlord may retain an appropriate portion of the deposit to cover the repairs. However, such repairs do not encompass normal wear and tear of the premises, for example carpet cleaning.

]]> (Jeanna Rasmussen) Business Law Thu, 12 Nov 2009 00:00:00 +0000