Much of my practice is designing and negotiating contracts. I have negotiated contracts with IBM, Unisys and the Federal Reserve Bank. To avoid disagreements, it is best to spell out your business relationship in a well written contract. For example, a poorly drafted provision covering how you will be reimbursed for out of pocket expenses can result in endless bickering and damage to your business.
After negotiating hundreds of contracts, I know the importance of discovering all party's needs. With this knowledge, I can give each party what they need, producing a winwin contract that improves the working relationship of the parties. The bottom line is more profits and an amicable business relationship.
Let me negotiate your important contracts to avoid losing business.
There are literally thousands of different contracts and other legal documents. Which do you need?
SALES,SERVICE, VENDOR, INDEPENDENT CONTRACTOR, EMPLOYMENT, LEASES, LICENSING, PARTNERSHIP, FRANCHISE, DEEDS, NOTES, WILLS, TRUSTS, CONSULTING, RELEASES, BILL OF SALE,
FOCUS: BUY SELL AGREEMENTS
One important contract for a business with more than one owner is the buy sell agreement. A BSA can restrict the sale of an owner's interest, require a terminated owner to offer his interest back to the business or other owners, provide who will buy your business if you die and specify the price. For example, the BSA may require the business to buy your interest upon your death, so your spouse receives cash while another owner ends up with the business. Life insurance can be purchased to provide the cash needed to make the purchase. If a business uses key man life insurance to pay for its redemption of stock, the alternative minimum tax (AMT) is a risk.
FOCUS: BUSINESS SALE AGREEMENT
Another form of contract I often work with is the business sales agreement. These agreements can be amazingly complex. Before entering into such an agreement, both parties must first discover all important facts, including several years of financial statements and tax returns. It is also necessary to inspect the premises and assets, as well as to talk to third parties doing business with the target. Lawyers and accountants should review all information, especially key contracts, financial statements and tax returns.
If the business to be purchased is a corporation, the buyer may buy stock or assets. The seller generally wants to sell stock because the sale results in capital gain to the seller. The buyer will want to buy assets so the buyer will have new assets to depreciate at the purchases price. It takes 15 years for a buyer to write off goodwill. These are only a few of the tax issues.
An experienced tax attorney has an advantage in working out a mutually beneficial deal.
One of the biggest questions in business purchase is the price. There are at least three major evaluation methods for business not publicly traded:
1. Comparing sales of similar businesses
2. Value of the assets less its liabilities
3. The capitalization method forecasts the business's earnings and sets the price so that those earnings represent a good rate of return on that price
Appraisers often mix methods and then adjust the value based on highly subjective factors.