When there are two or more equity holders, a Buy-Sell Agreement is a powerful tool to help control a company’s future. Contractually determining what happens to the company stock after a triggering event (termination of employment, disability, death, third party offers) can avoid shareholder disputes and can also solve some of the owners’ estate planning problems. While no single, sure-fire method of determining the price exists, having a well thought out formula and contractual obligation to regularly update the valuation of the stock price is essential.
At Antheil Maslow & MacMinn our business is growing, so we are always looking for highly qualified attorneys to join our team. Attorneys who join our firm are assured the opportunity to work on challenging legal matters in a collegial, supportive environment.
Litigation Assistant:
Growing Doylestown law firm seeks an experienced full-time legal assistant to support 3 attorneys in a fast-paced litigation practice. Position requires excellent technical skills, proficiency with Microsoft applications, attention to detail and initiative. Duties to include trial preparation, preparation of discovery and pleadings documentation, completing court filings, including e-filing in various levels of state, federal and appellate court systems. Preparation and service of subpoenas, scheduling, client and court communications. Must be tech savvy and able to learn software and e-filing procedures.
The firm offers competitive salary and benefits package, and opportunity to work in a dynamic and friendly environment. Only candidates with a minimum 3 years legal assistant experience who live within a reasonable commuting distance will be considered. Provide resume to tlang@ammlaw.com.
Staff at Antheil Maslow & MacMinn are skipping inter-office gift giving this holiday season and are choosing to donate instead to Buck Up Bucks County. We challenge all area firms to do the same. Its a great way to save time shopping for gifts that no one needs, and divert the money to those who are very much in need!
All funds raised by Buck Up Bucks County will go directly toward renovating the existing bathrooms at the Bucks County Emergency Homeless Shelter and purchasing a bus for Advocates for Homeless & Those in Need, an organization which provides transportation and shelter to that population in lower Bucks County. Antheil Maslow & MacMinn is a canister location for those who wish to donate to this important cause.
My wife doesn’t eat fish. Chicken is the staple of the diet in our house. Despite careful consideration, sometimes she gets tricked into consuming what looks like a tasty morsel only to be disappointed by the taste and texture of what comes from the sea. She promptly, but of course gracefully, extracts the fishy culprit from her mouth thereby rescinding the transaction and restoring her being to non-seafood status. Of course, a fishy business transaction cannot be so easily unwound.
Business transactions come in all shapes and sizes. From multi-million dollar mergers involving teams of lawyers and accountants to small asset purchases effectuated by only a bill of sale scribbled on a napkin. Most fall somewhere in between. Almost all involve disclosure of financial and business information in advance of closing in a “due diligence” period of evaluation and investigation. Due diligence is the means by which a buyer attempts to verify what the seller has to sell; the ongoing revenue stream and the customer pipeline. Sometimes the performance of the business after closing sharply contrasts the results of operations depicted in financial information exchanged in due diligence. The new owners are left without a roadmap to ascertain the disparities in performance. The investigation can be all consuming and require substantial attention and money at a time when the business is already in a period of transition. The new owners must balance examination of the transaction and results of operations against the focus required to conduct the daily activities of the business which, of course, remain pressing and are likely made more complex by the unexpected performance levels.
Hopefully, any agreements reached between the parties contain representations and warranties which could benefit the purchaser. The terms of the agreement are the best place to start the analysis of potential legal action. Generally, such agreements will represent and warrant the financial information exchanged in due diligence was accurate and adequately described the performance of the business. For example, often tax returns, profit and loss statements and balance sheets will be exchanged in due diligence and subject to specific representations and warranties. Examination of what documents were specifically referenced as included in the representations and warranties is critical. Where the prevailing agreements contain integration clauses, the representations and warranties are of paramount importance as integration clauses can prohibit reliance upon statements and information not specifically incorporated into the four corners of the documents and bar claims such as negligent misrepresentation and, potentially, fraud.
Determining whether the profit and loss statements and balance sheets contain material mis-statements of operations can be complicated. The investigation must begin with securing all documents subject to due diligence and the verification that those documents were the same documents that were prepared in the ordinary course of business. Ensure that any financial records or tax returns produced by the seller match financial records available from a different source such as a broker, accountant or internal revenue service. Of course, information becomes more available after the commencement of litigation by virtue of the discovery process.
The forensic analysis involves testing the information set forth in summary form in the financial statements against whatever other information is available. Quickbooks reports can reveal adjustments made to performance results. The reality however, is that most business owners, and for that matter attorneys, lack the requisite expertise to effectively conduct the necessary investigation. Accordingly, a forensic accountant skilled in fraud examination and detection is a valuable member of the analytical team. Certainly, there is a cost associated with that service, which cost must be incurred before the results are clear, but the expertise of the investigation will often control the outcome. The forensic accountant is trained to identify inconsistencies such as whether payroll was accurately stated, whether inventory and costs of goods sold were appropriately booked and whether income as stated on the financial records is impacted by other unspecified factors. A preliminary forensic investigation is essential to the decision to pursue costly litigation.
A buyer must also consider the potential parties, their financial positions, and the types of claims that can be raised. In seller financed transactions, as opposed to bank financed transactions, the buyer’s leverage is significantly enhanced. In the former, the buyer may apply pressure to a seller by discontinuing payments. In the latter the bank generally has no regard for any claims the buyer may possess against the seller and simply demands its’ payment each month. Generally, no court will interfere with the bank’s rights to security and payment as same are not dependent on the result of any claims possessed by the buyer as against the seller. The ability to recover in litigation must also be considered. The distribution of purchase price, whether distributed to creditors or held in joint accounts in a tenancy by the entireties state can impose additional obstacles to recovery and necessarily impacts litigation strategy. Identification of potential defendants and causes of action is also essential. Pennsylvania recognizes the torts of negligent misrepresentation in certain circumstances including preparation of financial information for the reliance of others, aiding and abetting breach of fiduciary duty and conspiracy. Accordingly, to the extent a seller was assisted in the preparation of false financial information, those who assisted may also be appropriately identified as defendants when the facts are supportive of liability. Potential claims against a seller include breach of warranty, fraud, misrepresentation, conversion, unjust enrichment and, under the right set of fact, claims for punitive damages. Breach of warranty claims are often the best chance of success as the issue of intent (or lack thereof) has no bearing on proof of a breach of warranty claim.
Finally, consider the measure of damages. Under the right circumstances, lost profits can be claimed. However, post-closing failure (or alternatively, success), management issues and other factors can complicate the damages analysis. In the absence of a lost profits claim, the difference between the valuation of the company in accordance with the financial information presented and the financial information eventually uncovered may result is a simpler damage calculation. Of course, any such analysis also requires the assistance of a business valuation expert in addition to the forensic accountant referenced above. A buyer must also be wary of any damage limitations internal to the agreements between the parties as well as any internal statutes of limitations which may be set by agreement.
In contrast to the ease by which my wife can expel inadvertently consumed sea food, rescission in a business transaction is unlikely. The very idea of rescission, placing the parties back in their respective conditions, may be impossible based on post-sale performance. Claims for money damages are far more often the claims that proceed to conclusion.
Certainly, pursuit of litigation concerning the purchase of a business can be expensive and complicated. Any such decision must weigh the likelihood of success and the cost of that success, against the distraction such litigation may cause and potential impact of that distraction on business operations. That being said, sometimes a buyer simply has no choice and sometimes what smells rotten really is just that; rotten.
Alan Wandalowski, a Partner of Antheil Maslow & MacMinn, LLP, a Doylestown law firm has begun his term as President of the Bucks County Estate Planning Council. The first meeting of the 2014 - 2015 program year was held in September. Officers of the BCEPC make a five year commitment to the council, serving terms as Secretary, Treasurer, 1st and 2nd Vice President, and then as President of the organization. The Bucks County Estate Planning Council’s mission is to advance the knowledge of local estate planning professionals and to develop collegiality among estate planning professionals.
Alan’s practice concentrates in Estate Planning, Business Succession Planning, Taxation, Asset Protection and Wealth Transfer Planning, planning for Retirement and Life Insurance benefits, Probate and Trust Administration, Estate and Trust Litigation, and Elder Law.
Alan works closely with high net worth individuals, business owners, and their families, helping them implement their estate plans. Beyond preparing core planning documents such as Wills, Revocable Trusts, Powers of Attorney and Living Wills, Alan has extensive experience in developing more advanced planning techniques, including Irrevocable Life Insurance Trusts, Generation Skipping Trusts, Family Limited Partnerships, Limited Liability Companies, Intentionally Defective Grantor Trusts, Grantor Retained Annuity Trusts, Qualified Domestic Trusts, Charitable Remainder/Lead Trusts, and Private Foundations.
Mike Mills, a Partner of the firm, will be a featured speaker at the Central Bucks Chamber of Commerce's Economic Forum on Thursday, November 20th at 8:00 a.m. at the Waterwheel Restaurant, 4424 Old Easton Road, Doylestown. Mike will discuss selected current tax developments of importance to the business community.
Mike's practice focuses on helping businesses build and preserve value, and helping individuals preserve and protect their family wealth. Elizabeth Welsh, Executive Director of the Bucks County Workforce Investment Board, will also speak at this event.
Sue Maslow takes a moment to talk about her practice and why she loves working with clients to help them negotitate, problem solve and document the relationships that matter most to their business.
Antheil Maslow & MacMinn, LLP is proud to support the 14th Annual Central Bucks Chamber of Commerce Bucks Fever FilmFest. This is a wonderful local celebration of emerging filmmakers, so if you are a film buff, please come to Doylestown to participate in an evening of stimulating discussion, networking and the screening of the winning films.
On Sunday, October 12th, 2014 there will be three exciting events in Doylestown which are open to the public:
Sunday, October 12, 2014 4:00 p.m. - 6:00 p.m. | Panel Discussion: "How to Succeed in Television and Movies: Making your day job your dream job." Location: The Standard Club, 127 E. State Street, Doylestown, PA |
Sunday, October 12, 2014 6:00 p.m. - 7:00 p.m. | VIP Wine & Cheese Reception Location: County Theater, 20 E. State Street, Doylestown, PA |
Sunday, October 12, 2014 7:00 p.m. | FilmFest Night! Screening of winning short films and announcement of screenwriting competition winners! Location: County Theater, 20 E. State Street, Doylestown, PA |
For an overview of this event and a look at some clips from winning features of the past few years, click here
Joanne Murray, a partner of the firm, has been elected to the Fellows of the American Bar Foundation. “Joanne represents the best tradition of the Bar; she is deeply committed to serving her clients, and her level of service to professional and charitable organizations in the community is truly impressive. She is certainly deserving of this honor, and we are very pleased to celebrate the recognition of her accomplishments,” said Bill MacMinn, Managing Partner of Antheil Maslow and MacMinn. Murray was recognized by her peers for this prestigious honor because of her dedication to the law and significant contribution to the profession. She is actively involved in the Bucks County community, as the President-Elect of the Bucks County Bar Association, Vice Chair of the Board of Directors of the Bucks County Children’s Museum, Secretary of the Bucks County Symphony Foundation and as a Trustee of the Bucks County Bar Foundation. The Fellows of the American Bar Foundation is an honorary organization of lawyers, judges, and legal scholars whose public and private careers demonstrate outstanding dedication to their communities and to the highest principles of the legal profession.
Joanne concentrates her practice in the areas of business law, business transactions, contracts, banking and finance. She is an honors graduate of St. Joseph's University and Temple University School of Law. In addition to being a member of the Bucks County Bar Association, Murray belongs to the American, Pennsylvania and Philadelphia Bar Associations.
Our Annual Client Appreciation BBQ last Sunday was a great time for all! We couldn't have asked for better weather, and we thank all who took the time to join us for lunch. It's always nice to have a chance to show our appreciation to our clients and friends and to catch up and visit in a relaxed, social setting. We hope to see you all next year!