Business Transactions

Execution Is the Most Important Step for Your Negotiated Contract

After weeks of negotiating with the other side, you’ve reached an agreement in principle. You’ve gone through several drafts of the contract and even incurred legal fees for an attorney review. So why is that contract now a worthless piece of paper? Because it was never properly executed.

Not only does your document need to be signed by all the parties, it needs to be executed properly. Proper execution means at a minimum doing all of the following:

Identify the contracting parties correctly. While this seemingly obvious suggestion might make you roll your eyes and say “Duh!”, there’s a surprising number of contracts that get this information wrong. Hence, if you’ve organized a company so you can have limited liability for your business activities, make sure the company – and not you – is the contracting party. If you or the other side is a company with subsidiaries and affiliates, make sure the contract names the correct subsidiary.

Insist on legibility. At some future point, you might need to prove the contract is valid and you’ll want to be able to identify the person on the other side who signed. Some people have signatures that are completely illegible. I’ve seen signatures that are nothing but a loop followed by a wavy line. If your counterpart has that genre of signature, it is even more imperative that she also print her name beneath the signature and provide a title if signing on behalf of a business entity.

Don’t forget the initials. Indicate whether the contracting party is a corporation, general partnership, limited liability company, or a solo proprietorship doing business under an assumed name. Do this by using the full legal name of the contracting party which may include an “Inc.”, “LLC”, or “DBA”.

Complimentary Jan. 14 Teleseminar on Joint Ventures

I’m hosting a complimentary teleseminar, Using Joint Ventures to Survive the Economic Downturn. It takes place on Wednesday, January 14, 2009, at 3:00 pm ET/ 12:00 pm PT. You can register at http://www.joybutler.com/seminarinfo.htm

 

THE ISSUE:   We’re surrounded by constant reminders of our current challenging economic times.  A joint venture – which is a method of pooling resources with others so you don’t have to go it alone - might be the key to economic survival for some businesses and entrepreneurs. 

If you think a joint venture is the exclusive territory of Fortune 500 companies, think again. There are many opportunities for individual entrepreneurs and small companies to work together. Your joint venture might be as straightforward as sharing a customer list for a combined marketing campaign, licensing a product you've developed, or providing original content for a website.

THE TELESEMINAR.  During the seminar, I’ll address the practical questions you need to answer in order to form a beneficial and smooth-operating joint venture:

 

* Which method of joint venturing is most appropriate for your circumstances? 

* Should you organize your joint venture as an LLC, partnership, or corporation?

* Do you need a written agreement and what terms should it contain?

* What are the factors that make joint ventures fail and how can you avoid them?

* How can you save money on legal costs when structuring your joint venture?

 

REGISTRATION.  The live teleseminar occurs on Wednesday, January 14, 2009 at 3:00 pm ET / 12:00 pm PT.  Register at http://www.joybutler.com/seminarinfo.htm.

 

Battle of the Forms: EULAs Versus Purchase Orders

I have negotiated dozens of licensing deals for clients who offer software, databases, and other intellectual property assets to their licensees.   After you spend substantial time and resources on protecting your rights and interests through a negotiated end user license agreement (often called a EULA), make sure you do not negate all those benefits by accepting an inconsistent purchase order.

Many purchase orders include up to a few pages of terms and conditions. While the other side may encourage you to view those few pages of language as irrelevant boilerplate, the language can become important.

 

Indie Video Game Developers Earn Through Licensing Deals

Traditionally, the video game industry has been comprised of large companies like Electronic Arts, Microsoft, and  Nintendo selling their multi-million dollar budgeted, blockbuster titles directly to consumers. The industry now includes more web-based, lower-budget, independent games which find sponsors and audiences through websites like Flashgamelicense.com, Kongregate, and Addicting Games.

The Wall Street Journal recently carried an article on the trend, "Notes From the Underground: Indie Videogames Come of Age", written by Christopher Lawton. Lawton's article includes an estimate of the independent video game market or casual game market being at $1 billion when you factor in revenue from advertising, downloads, and subscription fees.

The trend spawns a growth in transactions in which independent developers earn income by licensing their games to intermediaries and/or by sharing in advertising and premium sale revenue with those intermediaries. As a business and intellectual property attorney who has worked on many licensing deals, I offer some issues about revenue-sharing, representations, and exclusivity for the consideration of those negotiating such video game licensing transactions

Some Initial Tips for Selling a Business

Here are just three initial tips for business people considering selling their company:

• If your company is organized as a corporation or limited liability company, make sure that your organizational documents are up-to-date. You will have to represent that they are as part of the sale.

• If your business includes valuable copyrights, trademarks, and other intellectual property, make sure you actually own that intellectual property and are authorized to transfer it to the seller.

• Begin the deal with a term sheet . A term sheet is a document of a few pages that outlines the key elements of your deal. Think of it as a road map to closing. By completing a term sheet, the buyer and seller confirm that a deal is possible before they expend time and resources on the negotiation of a much longer purchase agreement.

An Introduction to Joint Ventures and Strategic Alliances

For some, a joint venture or strategic alliance may sound like the territory of a Fortune 500 company. In truth, your venture or alliance might be as straightforward as collaborating with a colleague on a software application, teaming up with another company on a marketing campaign, or licensing a product you've developed.

The terms joint venture and strategic alliance are often used interchangeably but there are some distinctions between the two. Here are formal definitions of  “ joint venture” and “strategic alliance”.

Steps in a Business Transaction. Part Six. Closing and Ancillary Documents.

This is Part Six in a series discussing steps in a business transaction.  In this part, I’ll discuss closing and ancillary documents.

For simple transactions, the “closing” simply consists of the parties signing the final version of the definitive agreement and making any payments due upon signing. For more complicated transactions, signing of a definitive agreement sets forth all the steps that are to occur prior to the closing. 

Steps in a Business Transaction. Part Five. Due Diligence Review.

This is Part Five in a series discussing steps in a business transaction. In this part, I’ll discuss the due diligence review. In short, a due diligence review is your chance to make sure that you are receiving in the transaction that for which you have bargained.

The scope of the review depends upon the transaction. If you are spending a few million dollars to purchase or invest in a company, you will do a more thorough due diligence review than if you are entering a licensing agreement that can be terminated with thirty days notice.

Steps in a Business Transaction. Part Four. Regulatory or Third Party Approval.

This is Part Four in a series discussing steps in a business transaction. In Parts One, Two, and Three, I discussed term sheets, definitive agreements, and financing. In this part, I’ll discuss regulatory and third party approvals.

Steps in a Business Transaction. Part Three. Financing.

This is Part Three in a series discussing steps in a business transaction. In Parts One and Two, I discussed term sheets and definitive agreements. In this part, I’ll discuss financing considerations.

There are several methods of financing. Having the money required to complete the transaction available in your company or personal account certainly simplifies matters from a legal and paperwork point of view. However, there may be good business reasons that you want to use other sources of money for your transaction.

Other forms of financing include, private investor financing, venture capital financing, bank financing, and seller financing. These are the forms of financing most commonly used by my clients; however, the list is not exhaustive. Each method offers pros and cons.