Friends Can Be Bad Business Partners

Launching a startup business with a friend can be an exciting and rewarding experience. However, I suggest you take a moment and really think about what the potential consequences might be. Starting a business is tough and having a friend involved will only make it more difficult if things go

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Where to Incorporate

After you have made the decision to incorporate, the next question is “where to incoporate?” You can incorporate in your own state and be considered a domestic corporation, or you can incorporate elsewhere and do business in your own state as a foreign corporation. Generally, if most of your business

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When to Use an Earnout Provision

An earnout is the method of paying the seller of a company based on that company’s future earnings. The earnout will call for additional payments to the seller if the company’s post-sale earnings reach a certain level. The earnout is useful when buyer and seller do not agree about the

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Watching Your Client Overleverage an Acquisition

As counsel, is it appropriate to speak up if you believe your client is overleveraging to finance an acquisition? Two factors must be considered to answer this question: (1) Your capacity. You are an attorney (not an I-banker). That law-school corporate finance elective or that undergrad finance degree might have

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Include Confidentiality Clause in Letter of Intent

When negotiations need to remain confidential, a letter of intent should obviously include a confidentiality cause. But in the case of startup companies–replete with their fresh and new ideas–a confidentiality clause is a requirement. Information will be exchanged during due diligence and the negotiations, thus the parties should agree on

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Every Situation is Unique When Choosing an Entity

When starting a business, probably the biggest early decision an individual will make is which form of organization is best for his (or her!) business operations. Unfortunately, there is no formula nor book at Barnes & Noble that can magically determine the ‘best’ entity for your startup company. A complex

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