50-50 Corporate Deadlock–What Are Your Options? Let’s say you start up a company with a good friend. You each own 50% of the stock (or, membership interest in the case of a limited liability company). You design and sell a successful product. Everything is going great—until suddenly, it isn’t. The business is fine. But your relationship with your co-owner is not. Maybe you disagree on retaining an employee. Maybe you disagree on pricing a new product. Maybe you disagree on if and how the business should expand. You both have a strong conviction about the way the business should be running ..read more

There are several considerations when deciding between forming a corporation or a limited liability company. The common considerations include taxation, liability exposure, management flexibility, and the need for capital.     In this post, I’ll exclusively focus answering the question  “LLC or Corp?” by analyzing the need for additional capital to grow your business, with an emphasis on why you should incorporate if you plan to seek venture capital financing. It is no mystery businesses need money – especially to grow. It is one question all entrepreneurs think about, or at ..read more

In January 2022, the Massachusetts Supreme Judicial Court (SJC) rendered a unanimous decision that will have long-lasting implications for the Massachusetts business community. The decision has consequences for any company who conducts business which implicates Massachusetts law, specifically M.G.L. c. 93A. Businesses outside of Massachusetts whose conduct or relationship bring them into the Commonwealth may also fall under the purview of Chapter 93A and be implicated by the SJC’s decision. On January 24, 2022, the SJC issued a ruling that directly curtailed the enforceability of limitation ..read more

AI can have a positive impact on the value of a business, but it can also have a negative impact if it is not disclosed properly to investors, when it comes to predicting the unpredictable.  In a recent example, the real estate company Zillow just experienced a rough Q4 in 2021. The company is now facing two class action shareholder lawsuits in federal courts over claims that it misrepresented the profitability of its home-flipping business, Zillow Offers. Zillow’s predictive algorithms proved no match for the volatility of the market. The company’s predictive promises also faced supp ..read more

I probably don’t have to tell you this since you are living it, but the COVID-19 (“Coronavirus”) pandemic is screwing things up for a lot of people and businesses. Because of the pandemic many businesses have been unable to fulfill their contractual obligations. For example, in Massachusetts, as with many states – and even countries – Governor Charlie Baker ordered all non-essential businesses to temporarily cease in-person operations. As a result, many business are now using the Coronavirus as an excuse for nonperformance. You may have heard, “Sorry, due to the Coronavirus we can’t [deliv ..read more

You need to sell your business.  Your financial situation is dire, and a business sale is your lifeline.  A buyer appears.  Everything seems great.  The parties negotiate the terms without incident.  The town council needs to approve the transfer of the business license, but everyone is confident that the council will do so.  The buyer signs your asset purchase agreement, with the closing to take place three days after the buyer obtains the town council’s approval of the transfer.  To drive home the point that you want (and need) this deal done, as soon ..read more

Imagine that you and a close friend are starting a business. Money is tight as the majority of your funds have been invested into the business itself. The two of you seek out a lawyer in order to draft a partnership agreement. While you and your friend have never fought before, you fear that some disputes may arise as the business grows. As mentioned, money is tight, and you worry that any disputes which need to be handled pursuant to the partnership agreement could be costly to you and the success of the business itself. While arbitration or mediation seems cheaper than litigation itself ..read more

Mergers & Acquisitions can be worked out in every way according to the basic metrics: profitability, hiring and product. When it comes to culture, however, potential problems are often overlooked. This can affect the organization in any number of material ways and even lead to liability exposure. Most importantly, however, it can affect the success of the merger itself. According to Harvard Business Review, between 70 and 90 percent of mergers fail. According to a 2015 study, 85 percent of companies reported that failure to address culture was a key obstacle in successful mergers and ac ..read more

Threat actors have found a promising opportunity to get targets to pay – mergers and acquisitions. During a business deal, merger or acquisition, hackers leverage non-public information that could damage a company’s reputation or expose the company to liability and even criminal consequences. A company going through a merger or an acquisition is a ripe target for malicious actors. The FBI recently issued a private industry notification (PIN) warning that ransomware gangs were targeting companies involved in “time-sensitive financial events” that included mergers and acquisitions. A congression ..read more

Entrepreneurs often start their business as a limited liability company (LLC). As the company grows and the need for outside capital comes to the forefront, entrepreneurs will often turn to angle investors, venture capitalists, or private equity for that much needed injection of capital. In the spirit of securing the financing, entrepreneurs will often be faced with demands from these investors to convert their business to a C corporation. In this post I share with you a general overview of how to convert your LLC to a corporation.  I will also share a list of consideration you should ..read more