Maitland, Fla., August 28, 2017－BrewerLong announces their renewed focus and commitment to being one of Central Florida’s best business law firms, meeting the needs of business owners and executives as they start, run, grow, and ultimately sell their businesses. “Our firm has been in business for almost ten years, and we have come to realize our unique strengths and values,” said founding partner and attorney Trevor Brewer. “Our clients look to us as problem solvers who alleviate their business headaches. Our extensive network of independent service providers allows us to partner with other industry experts when our clients need more than just a business attorney. We utilize a holistic team approach so we can provide the right solution to solve our clients’ problems.” This renewed focus allows BrewerLong to partner with business owners and executives through every step of the business life-cycle. By focusing on the various seasons of a business – birth, growth, maturity, and sale – BrewerLong delivers exceptional legal services for these clients. BrewerLong will continue to embrace its distinct role as a connector and influencer in the Central Florida business community. The firm is well known for its involvement in various associations, chambers, and nonprofits, and has a longstanding commitment to hosting their own professional alliance groups and educational workshops. This dedication to building relationships and connecting professionals is vital to BrewerLong’s proven ability to provide an exemplary client experience. Because of BrewerLong’s renewed focus on serving businesses, estate planning will no longer be a focal point for the firm. Estate planning attorney, Shannon R. Campbell, has left the firm to continue her legal practice as a sole practitioner, meeting the needs of individuals and families in the areas of estate planning, probate and elder law. “We have greatly enjoyed our time practicing with Shannon,” said Trevor Brewer. “She will continue to be a valued member of our extended professional network and we wish her success in her practice.”
Buying a business is a great way to hit the ground running as a business owner. These ten issues will help reduce your risk and maximize your profits when you buy a company. The Next Right Step. After agreeing in principle to buy the business (through a Letter of Intent, Term Sheet, or handshake), the buyer and seller must decide on what comes next. The seller might favor negotiating and signing the purchase agreement, followed by a period of due diligence investigation, followed by a closing. The buyer would probably prefer to take care of the due diligence first, and then “sign and close.” What are You Buying? Stock or assets? The seller will probably want to sell the stock (or other company ownership interests) of the target company, but this exposes buyer to greater risk from liabilities arising prior to the sale. The buyer might prefer to buy all the business assets, but valuable contracts and rights belonging to the company might be subject to transfer restrictions, making an asset purchase difficult. Says Who? It is important to know, as early as possible, whose approval is required for the transaction. Certainly, the stock (or other equity) owners of both buyer and target company, but what about option holders? What about the target company’s lenders, landlord, or other contract parties? What about government agencies? Kick the Tires. The most important step in the purchase process is a thorough due diligence investigation of the target company. Insist that the seller answer all of your questions and let you review every contract, record, and detail about the target company. The purchase agreement should make the seller liable for misleading the buyer, but it’s easier to do the due diligence up front than to rely on seller’s contractual obligation. On the Hook. The purchase agreement should include detailed representations and warranties from the seller that the target company is clean, except for “warts” that are specifically identified and acceptably dealt with. The purchase agreement should also explicitly provide that the seller will indemnify the buyer for any losses or costs resulting from an undisclosed “wart.” Get Back. Representations, warranties, and indemnification are a must, but they only give the buyer the opportunity to sue seller over any breach of the purchase agreement or liability not assumed by the buyer. Lawsuits are never much fun, and the results can be surprising. A safer means of protection is to hold back payment of part of the purchase money (or put it in escrow) until the indemnification period is over. Taxes for All. You know that seller will pay capital gains taxes on the sale of the stock or business assets, but the buyer might be liable for taxes as well. Purchase of certain business assets (especially vehicles) might give rise to sales taxes. Purchase of real estate will require documentary stamp taxes, and payment with a promissory note may trigger intangibles taxes. Who pays these taxes should be negotiated. Thanks, Internal Revenue Code. An election under IRC Section 338(h)(10) allows the buyer to purchase corporate stock but the seller to effectively sell the business assets. This takes the tax sting out of a stock purchase by allowing the buyer to allocate the purchase price to the basis of the business assets. Stay or Go. Should the seller be required to continue working in the business after the transaction? Don’t expect sellers to work as hard for the buyer as they did when it was their company. On the other hand, the seller has valuable information about running the business. This Ain’t a House. Beware a purchase contract that is no more than a broker’s form real estate contract with “Business” written at the end. These contracts don’t protect buyers at all. In fact, they mostly just protect the broker. You need a real purchase agreement (and a real attorney).
We don’t like to think about it, but we are all going to die someday. What will happen to your company after your death? The Hardest Decisions. For business owners, the business is often the largest (or only) valuable asset of the estate. Who should inherit the business? How much direct control should they have over the business? What if they are bad business people? What if they don’t want to continue the business? How important is continuing the business legacy? These are just some of the tough questions that must be answered. Trust is a Must. The death of the business owner is turmoil enough; that turmoil shouldn’t be prolonged by uncertainty in the probate administration of business assets. The business owner’s stock or membership interest should be titled in a revocable trust, so the successor trustee can start making business decisions immediately. Business-Minded Trustees. Your mother, father, brother or sister might make a great trustee when it comes to caring for your children, but you need a trustee who will be a savvy business owner like you. You can designate a special trustee or co-trustee specifically to handle the business assets. Now What? What should managers and employees do the day after the business owner dies? Have a written plan of action and make sure someone at the office knows where to find it. Especially important, make sure everyone knows who calls the shots. Insurance for Lost Keys. After the death of a business owner, business-as-usual is nearly impossible. Business performance could suffer for weeks, months, or longer while everyone figures out how to deal with the owner’s loss. In the meantime, bills still need to be paid. Making matters worse, the owner’s death could trigger defaults on credit lines and loans guaranteed by the owner. Company-owned key person life insurance can provide additional capital to help the business get back on stable footing. The Name on the Page. Many businesses rely on the qualification(s) or licensing of the owner in order to stay in business. What happens when the owner—and his or her qualification(s) or license(s)—dies? There may be a grace period to find another licensed person, but this differs from industry to industry. Stock Rich, Cash Poor. A valuable operating business can produce a large estate tax bill, but it might not generate the cash necessary to pay the IRS. The business-owning estate might be allowed to stretch out payment of the tax bill, but it will still be a drain of much-needed cash. Life insurance can provide cash to pay the estate taxes so the business can be left alone. How About a Discount? Generally, a business owned by one person has a greater taxable value than a business owned by several people. Dividing up the ownership of your business can result in discounts of as much as 40% for estate tax purposes. Gifts to family members, long-term grantor retained trusts, and installment sales to intentionally defective grantor trusts can all result in estate tax discounts. No Charity for S Corps. Business owners can use gifts to charitable remainder trusts to generate immediate income tax deductions and partially avoid capital gain taxes on a future sale of the business, but not if the business is an S corporation. The S corp rules prohibit stock ownership by a charitable remainder trust. The Next Generation. Who should inherit the business—a surviving spouse or children from a prior marriage? Often, the business owner wants the children to inherit the business, but the surviving spouse might exercise an elective share and take part of the stock. The business owner should consider having a prenuptial agreement to ensure that the business goes to the children.