Flexibility of LLCs

In our first post in this series on choosing the best entity for your new business we explored sole proprietorships and partnerships. Today’s post will highlight two additional business entities: the limited liability company (LLC) and corporation.

Flexibility is Key for the LLC

An LLC is a legal entity in which one or more individuals (“members”) have limited liability for the business’ debts and obligations even if they participate in management of the company. Members of an LLC have great flexibility in structuring the operation and management of their venture through the LLC’s governing document, known as an operating agreement. If the LLC does not draft an operating agreement, its activities will be governed by state statute.

For tax purposes, an LLC is…

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Seattle Zoning Map

When you are negotiating an agreement, there are all sorts of ways contract discussions can break down. Often when negotiations become difficult, a contingent contract is a compromise that can lead to a mutually beneficial resolution.

What Is a Contingent Contract?

A contingent contract is an agreement in which the parties to the contract agree to different obligations depending on a...

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Counterparts

We continue the Understanding Contract Terms series by explaining counterparts clauses. Most contracts include some form of counterparts clause. Counterparts clauses are important to understand when you need to determine how a contract can be executed and when it is enforceable.

What is a “Counterpart”?

Counterparts, in contract law, are one of several written papers that constitute a contract, such as...

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Hedge Fund Law

This is our third post in our series on understanding hedge funds. Today, we will be discussing the specifics of the high-water provision and how it seeks to provide proper incentives and fair compensation for both parties to a hedge fund.

As discussed in our first post on hedge funds, most hedge fund managers charge clients a performance fee between...

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Crowdfunding Rules Debate

IPO Market Heats Up

The market for initial public offerings seems to be heating up announced the NY Times this week after Grubhub began selling stock publicly. Grubhub’s IPO price raised 40% in the first day of trading but has since waned.  The Grubhub deal, which followed the earlier merger of Grubhub and its one time rival Seamless, was among...

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New York Stock Exchange Trading Floor

Generally speaking, broker-dealers are people that are in the business of buying and selling securities or in the business of helping others buy and sell securities. Brokers and dealers are subject to extensive regulation by the Securities Exchange Commission and state regulators.

The broker-dealer regulations are designed to make sure that people in the business of buying and selling securities...

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Limitation of Liability

We continue the Understanding Contract Terms series by explaining limitation of liability (sometimes called “limitation on liability”) clauses. Many contracts include some form of limitation of liability clause, and they are important to understand to determine your potential liability exposure under your business’ contracts.

Limiting Your Liability A limitation of liability clause allows parties to reduce or, in some cases, eliminate...

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Thumbs Down

Facebook Buys Oculus VR; Non-equity Stakeholders Feel Slighted

After raising $2.4 million through a Kickstarter campaign that helped bring their virtual reality headset to real reality, Oculus VR sold to Facebook in a cash and stock deal worth $1.99 billion. The company announced it was joining Facebook because “his partnership is one of the most important moments for virtual reality:...

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Business Valuation - Bean Counting

Entrepreneurs and business owners will generally need to value their business on many occasions during the course of a career. Whether part of a seed investment round, follow-on series investment round, merger or acquisition, partnership or owner dispute, or a partnership or ownership divorce, you will likely need to fix a value to the business you are building or have...

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Escape Hatch Amendments

We continue the Understanding Contract Terms series by explaining amendment clauses. Most contracts include some form of amendment clause. Amendment clauses are important to understand when determining your rights and liabilities under almost any contract and how those rights and liabilities can be amended.

When it Matters to Have a Well-drafted Amendments Clause

There are often times when circumstances change and...

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