Buying and Selling A Business

January 20, 2014 By Wesley Jones

FORMING A CORPORATION IN NORTH CAROLINA

Forming a Corporation to start or operate a business in North Carolina can be beneficial to the business owners in two important ways: 1) it can help prevent the business owner from paying too much in federal and state income taxes and 2) it can help protect the business owners from incurring Personal Liability for acts carried out by the business.

So what are the main steps in forming a North Carolina Corporation?

You must select a Business Name and make sure that name is available for use in North Carolina.

You must file proper and complete Articles of Incorporation with the North Carolina Secretary of State.

Before filing the Articles of Incorporation, you must determine the number of shares the corporation will be authorized to issue (Issued Shares), the class of shares to be issued, who will serve as the Registered Agent, what will be the Registered Agent Address, and who will serve as the Incorporator.

After the Articles of Incorporation have been filed, must must hold an Organizational Meeting.

At the Organizational Meeting, you must elect Directors, appoint Officers, adopt a set of Bylaws, adopt a Corporate Seal, and issue Stock Certificates to the business owners (called Shareholders).

Before operating the business, you will want to apply for a Federal Identification Number (EIN Number) and State Identification Number for banking and tax purposes.

If you qualify and wish to be treated as an S-Corporation for tax purposes, you must complete and file IRS Form 2553.

Other Considerations: Should you file an Assumed Name Certificate? Do you need a Privilege License to operate your business? Do the business owners need a Shareholders Agreement? When should you file your first Annual Report with the North Carolina Secretary of State’s office? What Corporate Formalities should I follow to keep my corporation valid as a legal entity?

If you are planning to form a North Carolina Corporation, the foregoing topics are just a few that a business owner must successfully navigate through to begin operating a business. If you need help or advice, call an experienced Business Attorney. Call Wesley Scott Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Business Lawyer serving in Wilmington, North Carolina serving all of Southeastern North Carolina including New Hanover County (e.g. Wilmington, Kure Beach, Wrightsville Beach, Carolina Beach and the areas of Ogden, Masonboro, Myrtle Grove, Landfall, and Mayfair), all of Pender County (e.g. Burgaw, Surf City, Hampstead and Topsail Beach) and all of Brunswick County (e.g. Bald Head Island, Bolivia, Calabash, Leland, Shallotte, Southport, Saint James, Ocean Isle, and Oak Island).

The following are just a few of the Business Services that Wesley Scott Jones provides to clients: Forming new Corporations and Limited Liability Companies, drafting Articles of Incorporation, Articles of Organization, Shareholders Agreements, Organizational Minutes, Operating Agreements, Annual Meeting Minutes, Bylaws, Annual Reports, Assignments, Board of Director’s Meeting Minutes, Business Entity Startup and Formation, Representing clients who are Buying or Selling a Business, Business Dissolution and Liquidation, Contract Review and Drafting (including Non-Compete or Noncompetition Agreements, Confidentiality Agreements, and Nondisclosure Agreements), Due Diligence Research, Leases, Licensing, Non-Profit Corporations, Non-Solicitation Agreements, Professional Malpractice, Promissory Notes, and Regulatory Compliance.

December 15, 2013 By Wesley Jones

ASSET PURCHASE AGREEMENTS: Closing Considerations in North Carolina

Depending upon the type of Business Assets involved, the following are just a few of the documents that a potential Buyer and Seller may want to include in an Asset Purchase Agreement at Closing:

The Parties will need a Bill of Sale and Assignment of Property.

The Buyer should determine if it needs to form a new Business Entity with which to buy the Seller’s assets.

The Buyer should consider whether it wants or need a Noncompetion Agreement with the Seller and/or the Seller’s Shareholders/Members, and/or Key Employees.

If Intellectual Property is involved, the parties will need an Assignment of Trademarks, Patents, and/or Copyrights, as applicable.

If the Seller’s website domain, email addresses, and/or telephone numbers are involved, the parties will need an Assignment Agreement to cover these items.

The parties will need an Assignment of Contracts, Leases, and/or Liabilities as applicable.

If the Buyer wants the Seller’s owners and/or Key Employees to assist Buyer with Buyer’s new business for a period of time after Closing, the Buyer will need an Employment/Consulting Agreement with these parties.

If the Buyer is not paying cash at Closing, the Seller will at a minimum want a Promissory Note signed by the Buyer, and a Seller should consider whether additional security is needed in the form of a Personal Guarantee Agreement signed by the Buyer’s individual Owners, a Security Agreement on transferred personal property, or a Deed of Trust on transferred Real Property.

The Buyer will want appropriate Approvals by the Seller’s Stockholders/Members and Board or Directors/Members.

The Seller will want appropriate Approvals by the Buyer’s Stockholders/Members and Board of Directors/Members.

If you are planning to Purchase the Assets of an existing business, the foregoing documents are just a few that a potential Buyer and Seller may want to include in an Asset Purchase Agreement. If you need help or advice, call an experienced Business Attorney. Call Wesley Scott Jones now at 910-256-5800 for a free telephone consultation.

The following are just a few of the Business Services that Wesley Scott Jones provides to clients: Annual Meeting Minutes, Annual Reports, Assignments, Board of Director’s Meeting Minutes, Business Entity Startup and Formation, Buying or Selling a Business, and Business Dissolution and Liquidation, Bylaws, Contract Review and Drafting (including Non-Compete or Noncompetition Agreements, Confidentiality Agreements, and Nondisclosure Agreements), Due Diligence Research, Drafting Shareholder and Operating Agreements, Drafting Shareholders and Directors Meeting Minutes, Leases, Licensing, Limited Liability Company Formation, LLCs, Meeting Minutes, Non-Profit Corporations, Non-Solicitation Agreements, Organizational Minutes, Partnership Formation, Professional Malpractice, Promissory Notes, Regulations, Shareholder Agreements, Shareholder’s Meeting Minutes, and Starting and Operating a Franchisee Business.

December 14, 2013 By Wesley Jones

ASSET PURCHASE AGREEMENTS: Pre-Closing Considerations in North Carolina

Depending upon the type of business assets that you want to purchase, the following are just a few of the things that a potential Buyer should consider:

Do you need a Nondisclosure Agreement with the Seller?

Is there an existing Broker/Finder Agreement that affects the transaction?

Have you determined all of the Related Parties on which due diligence should be performed (Seller, Stockholders/Members, Subsidiaries, or other Affiliated Entities)?

What is the Lien Status of the property to be conveyed?

Can the Seller produce a Certificate of Good Standing from the Secretary of State?

Are there any Third Party Consents required by Contracts with third parties that are to be assigned by Seller and assumed by Buyer?

Have you reviewed the Seller’s Financial Information?

If you are planning to Purchase the Assets of an existing business, these are just a few of the considerations that must be thought through and preferably verified prior to Closing on an Asset Purchase transaction in North Carolina. If you need help, call an experienced Business Attorney for advice and help. Call Wesley Jones now at 910-256-5800 for a free telephone consultation.

December 7, 2013 By Wesley Jones

NORTH CAROLINA NONCOMPETITION AGREEMENTS

1. Buying a New Business:

If you are buying a new business, either by an Asset Purchase or Stock Purchase, you should consider whether you should require the Seller and its owners and affiliates to sign a Non-Compete Agreement.

When you buy an existing business, part of what you are buying is the established know-how and goodwill that the Seller has accumulated through the years that makes the business successful.

You will be making an enormous investment into this business so you probably want to make sure the Seller, to whom you just paid a lot of money, will not set up shop right across the street in competition with you.

2. Starting a new Business or Operating an Existing Business:

Even if you are starting a new business or operating an existing business, you do not want Key Employees to steal your proprietary secrets and know-how that you have perfected over the years.

Way to often, employees will work for an employer for a number of years, acquire their customers lists, pricing guides, and other business operation methods, only to decide that they can do it better.

Why work for the owner when you can be the owner? Most businesses can benefit from have Key Employees sign a Non-Compete Agreement.

The terms of a Noncompetition Agreement will vary based upon your particular situation. However, all Noncompetition Agreements in North Carolina must be supported by adequate and New Consideration and they must be reasonable in scope as to Geographical and Time restrictions.

If you are Buying a New Business and want to protect yourself from the Seller competing directly against you and the new business OR if you have a New or Current Business where key employees have access to all of your proprietary business information, call an experienced lawyer to help you through the process. Call Wesley Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Business Law Attorney serving all of Southeastern North Carolina including New Hanover County (e.g. Wilmington, Kure Beach, Wrightsville Beach, Carolina Beach and the areas of Ogden, Masonboro, Myrtle Grove, Landfall, and Mayfair), all of Pender County (e.g. Burgaw, Surf City, Hampstead and Topsail Beach) and all of Brunswick County (e.g. Bald Head Island, Bolivia, Calabash, Leland, Shallotte, Southport, Saint James, Ocean Isle, and Oak Island).

December 1, 2013 By Wesley Jones

ASSET PURCHASE AGREEMENTS IN NORTH CAROLINA

A well drafted Asset Purchase Agreement should address the following topics:

Both parties must clearly define which Business Assets are being sold/purchased (the Purchased Assets) and which Business Assets are not being sold/purchased (the Excluded Assets).

Asset Purchase Agreement

Both parties must clearly define what liabilities, if any, are being assumed by the Buyer (the Assumed Liabilities) and which liabilities will remain with the Seller (the Excluded Liabilities).

The Purchase Price, how it will be paid, whether a deposit will be required, if required, what kind a Security Agreement will be required by the Seller, and the date, time and place of Closing.

How the Purchase Price will be allocated among the Purchased Assets.

Representations and Warranties from the Seller that: The Seller has the requisite power and authority to execute the Asset Purchase Agreement and to carry out the acts contemplated thereby; and The Seller has good and marketable title to all of the Purchased Asset, free and clear of any liens.

Representations and Warranties from the Buyer that: The Buyer has the requisite power and authority to execute the Asset Purchase Agreement and to carry out the acts contemplated thereby.

The Agreement should list all the Conditions Precedent that must occur prior to Closing.

Optional Provisions may include an Indemnification clause, a Risk of Loss clause, a No Broker clause, a Best Efforts clause, a Non-Competition Agreement, and a Governing law and Venue clause.

If you are planning to sell the assets of your business and to purchase the assets of another business, call an experienced lawyer to help you through the process. Call Wesley Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Business Law Attorney serving all of Southeastern North Carolina including New Hanover County (e.g. Wilmington, Kure Beach, Wrightsville Beach, Landfall, and Mayfair), all of Pender County (e.g. Burgaw and Topsail Beach, etc.) and all of Brunswick County (e.g. Bolivia, Southport, Ocean Isle, and Oak Island).

November 30, 2013 By Wesley Jones

BUYING AND SELLING A NORTH CAROLINA BUSINESS OR BUSINESS ASSETS

Are you considering Buying or Selling a Business or Business Assets? Where do you start?

If you are the Buyer should you buy the entire business (typically called a stock purchase) or just the business assets (typically called an asset purchase)? If you just buy the assets of another business should you do so as an individual or as a newly created entity such as a North Carolina Corporation or North Carolina Limited Liability Company? Should you require a Non-Compete Agreement with the Seller? Should you pay cash at closing or should your payment be structured over time?

If you are the Seller should you require cash at closing or accept payments over time? If you accept payments over time should you secure the debt with a UCC Financing Statement and/or a Personal Guarantee Agreement or other security interest?

As a Buyer or Seller does the North Carolina Bulk Sales Law apply to your transaction? These are just a few of the topics you must consider when Buying and Selling a North Carolina Business or Business Assets.

Call Wesley S. Jones now at 910-256-5800 for a free telephone consultation.

Business attorney serving all of Southeastern North Carolina including New Hanover County (e.g. Wilmington, Kure Beach, Wrightsville Beach, Landfall, and Mayfaire), all of Pender County (e.g. Burgaw and Topsail Beach) and all of Brunswick County (e.g. Bolivia, Southport, Ocean Isle and Oak Island).