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Small Business Owners: Don’t Sell to Search Funds!

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Business

If you are a small business owner, you may have been approached by a search fund regarding a potential business acquisition. While it may be tempting to sell your business to these investors, we caution against doing so! In this blog post, we’ll explain why selling to a search fund can be bad for small business owners.

One of the main reasons why selling to a search fund can be detrimental is that search funds are often backed by investors that you are not aware of who may gain ultimate control of your business. So the person you are negotiating the acquisition with may not be the person that ultimately carries on your business and the legacy that you have built and may not have the same vision or ambitions as you in taking over the business.

Another reason why selling to a search fund can be devastating to a small business owner is that search funds have the resources to court small business owners into an acquisition while privately working to limit the purchase price through loopholes in contracts and other unanticipated and fraudulent behavior. Many small businesses are not as sophisticated as the investors backing the search funds and can be taken advantage of in these business dealings.

An additional reason why selling your small business to a search fund can be problematic is that the search fund may ultimately decide to liquidate your business and its assets to maximize its return on investment. This can often leave small business owners with nothing after they have sold their business and can destroy the legacy that they have worked so hard to build and deplete any retirement they hoped to have.

Yet another reason to be wary of selling your business to a search fund is that they may not have the same commitment to the local community and its employees as you do. Search funds are often based out of state or even out of the country and their primary focus is on making a profit for their investors. They may decide to move the business to another location or lay off employees to save money and increase profits.

So if you’re a small business owner, we caution against selling your business to a search fund. There are many risks involved in doing so that can be detrimental to you and your business. It’s important to do your research and understand the potential risks before making any decisions.

Selling your business can be a difficult decision, and you want to be sure that you are getting the best possible deal. If a search fund approaches you about selling your business, do your research before making a decision and retain a business attorney throughout the process. There are many factors to consider before selling, and we hope this blog post has helped shed some light on why selling to a search fund may not be in your best interest.

So if you are approached by a search fund about acquiring your business, think twice before signing on the dotted line! It may not be in your best interest to sell to these types of investors.

If you’re interested in learning more, we suggest checking out our blog. Thanks for reading!

What’s the Difference Between LLC and Trademark?

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What’s the Difference Between LLC and Trademark?

Both LLCs and trademarks offer protections to businesses. But the protections they offer are different and rarely overlap. Between them, they protect everything from a business owner’s assets to the business’s assets to branding items that other businesses then can’t simply replicate. Learn more about both and why it could be good business practice to have both rather than either-or.

What Is an LLC?

An LLC is a legal business entity that exists to protect the business owner from lawsuits that could financially ruin a business and from business bankruptcies that could otherwise lead to personal bankruptcy. It separates the business owner from the business’s liabilities. If creditors take an LLC to court, the only assets they might gain access to are those of the business. The owner’s home, personal investment accounts, etc., can’t be taken. This also works in reverse, so if someone is personally sued, their business assets can’t be seized.

What Is a Trademark?

A trademark is a process conducted with the United States Patent and Trade Office (USPTO) to prove that specific types of marks, such as logos, branding, and taglines, are currently in use and specific to one business. Getting a registered trademark from the USPTO allows the business to have the only full rights to use that mark in conjunction with their business, whether it’s focused on products or services. A trademark is only issued for things that are currently in use, which the business owner has to prove. It can’t be applied for prior to use in a business, nor can it be maintained if the business goes dormant. It helps businesses protect their brands by giving them legal rights to use those marks in ways that other companies are prohibited from doing. It’s up to the business owner to make sure the trademark remains current as long as the mark is in use.

Why Do Both?

Having an LLC and trademarks offers protection for the business and business owner assets, while the trademark protects the intellectual property rights that the business needs to use in branding. There is a little overlap. For example, having an LLC protects a business within the state it’s registered in, which means that if someone tried to start a business with the same name and products or services within that state, the LLC can provide legal protection. But if someone across the state line tries to re-create the business, the LLC won’t help—but a federally registered trademark will.

Let Us Advise You

If you need assistance with setting up an LLC or applying for a trademark, call us at 317-663-9190 to learn more about each and how we can provide assistance in either case.

What Laws Protect Trademarks?

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What Laws Protect Trademarks?

There are a variety of laws that protect trademarks. These laws exist at both the state and national levels.

Are State or Federal Trademarks More Valuable?

Trademark law was initially done at the state level before there were 50 states. At the time, that was sufficient, as many businesses didn’t operate on a national level. However, by the late 1800s, a need for a more unified trademark program emerged. The federal government put the first national trademark law into place. Over the years, the federal laws have expanded and largely taken over what used to be run by the states. Today there are still state trademark laws that can be used, but it’s important to know that those laws only protect someone in the state where their business is located. If someone violates that trademark but in another state, the original business has little recourse. Having a federally registered trademark carries weight across state lines.

What Federal Laws Protect Trademarks?

The primary federal law is the Lanham Act, which entered into law in 1946 and still exists today. It has been updated over the years and now is the governing law around trademarks. It provides consistency across the nation so that there is far less confusion when multiple states are involved in trademark litigation and concerns.

What Does the Lanham Act Do?

The Lanham Act developed the standards for what can be considered trademarkable and whether something will receive a trademark. There are two primary considerations for whether a trademark will be registered. The first is if it will be used in use in commerce. Personal or placeholder trademarks are not allowed. Trademarks are strictly for business purposes.

The second consideration is whether or not the trademarked item is distinctive. That means it shouldn’t resemble, either in terms of wording or graphically, other trademarked items. If a proposed logo too strongly resembles an existing national company’s logo, and that company trademarked it first, the too-similar one will be rejected.

What Is the Best Way to Develop a Distinctive Trademark?

Research the United States Patent and Trademark Office’s database of existing trademarks. Finding out what other companies have already done can help whittle down the choices. Beyond that, look for names that are unusual and not too closely aligned with existing names, or choose logos that don’t strongly resemble those already trademarked. The more generic the name, the less likely the USPTO will grant a trademark for it. “Best Baked Goods” is generic, while “Diane’s Devilish Delights” is more likely to be unique (but research still needs to happen—there can be another Diane out there with the same idea).

Let Us Advise You

Trademark law can be complex and intimidating. Call us at 317-663-9190 to learn about the services we offer to assist with trademark registration and laws.

What Is Estate Planning Law?

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What Is Estate Planning Law?

An estate is defined as the real and personal property a specific person owned at the time of their death. Once the death has occurred, the property needs to be transferred. Usually, people have some ideas of where they’d like it to go, but it can be a complicated legal transaction. Planning for the estate to be transferred involves not only the emotional work but understanding the legal ramifications of an estate and the regulations that dictate the transference.

What Is Included In an Estate?

An estate is comprised of the assets left after the estate owner has passed away. That can include real estate (land and buildings), personal property (vehicles, jewelry, and other personal assets), stocks, bank accounts, other financial assets, and anything else that can be transferred. The estate becomes part of an inheritance when someone dies, and someone else becomes eligible to own these assets.

How Does Inheritance Work?

Someone inherits some or all of an estate depending on various legal reasons. If the estate had an estate plan and properly drawn-up will, those documents will be at the forefront of asset distribution. Sometimes a person dies intestate, which means they did not have a valid will at the time of their death. Being intestate can lead to the inheritors of the estate needing to go to court to determine how the assets will be distributed.

What Is an Advance Directive? Is It Part of Estate Planning?

An advanced directive can be part of estate planning. This type of legal document specifies what the person wants to be done or not done in terms of medical treatment if the person becomes unable to express their wishes directly. It can be done as a living will or as a durable power of attorney, the latter being a legally designated representative of the patient who can express those wishes when the patient cannot.

What Is Probate Court?

Probate court is involved in legally transferring property of an estate after the estate owner’s death. When an estate has a legally sound estate plan drawn up, complete with legally valid wills, probate can be avoided or at least be shortened. When the entire estate goes to probate, it can take months or even years to resolve and can be quite expensive.

Let Us Advise You

If you’re interested in learning more about estate planning law and how your estate can best prepare for the future, call 317-663-9190 for an appointment with one of our experienced estate planning lawyers.

What Is a Business Litigator?

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What Is a Business Litigator?

A business litigator is a type of lawyer who focuses exclusively on business legal matters that could lead to litigation or going to court. Businesses can face a wide range of legal challenges, whether external (for example, product users suing a company for damage done by the product) or internal (disgruntled former employees suing, public companies having conflicts with shareholders). They either respond to litigation brought against the company they represent, or they help their company prepare legal action against other companies or people.

What Do Business Litigators Do?

Of course, business litigators act as attorneys for companies, either in the plaintiff or defendant roles. But there are many things they do before arriving in the courtroom. They do extensive research on the issue at hand, collecting and studying the evidence, interviewing witnesses and experts, and developing a legal strategy. They provide legal advice to their clients and confer with their legal teams on the best approach for the specific situation. They will keep current on relevant laws and regulations affecting the company they represent so they can provide appropriate guidance and counsel. They can also help companies prevent legal problems by looking at actions or communications the company wants to make and discovering if there are potential negative legal ramifications, and making recommendations to avoid those negative outcomes.

What Kinds of Cases Do Business Litigators Handle?

They work with nearly anything that can affect a business. That means contracts that are under dispute or have been breached, class action suits against a company, claims of negligence or fraud, intellectual property protection, issues around trade secrets, disgruntled employees, disputes between business partners or between company leadership and the board of directors or, if a public company, shareholders.

Do Business Litigators Always End Up in Court?

Just because a business litigator is working on a company case does not mean that case will end up in court. Part of what business litigators do is to work on negotiations to settle cases out of court. It’s not always in the best interests of the litigants to proceed to trial, so working with the opposing counsel to find mutually agreeable terms to avoid that case can play an important role. At other times they’ll work with mediators and arbitrators to handle the cases.

Let Us Advise You

If your company has need of a business litigator, call us at 317-663-9190 to learn more about our business litigators and how we can provide assistance.

What Is a Business Lawyer?

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What Is a Business Lawyer?

The straightforward answer to this question is that a business lawyer serves companies and corporations on a variety of matters pertaining to their business. The range of legal services needed by businesses varies depending on the nature and size of the business. In general, a business lawyer helps companies ensure their organizations are operating legally and above board.

Do Business Lawyers Work With Financial Aspects of a Business?

When a company’s finances merge with legal concerns, a business lawyer can help work through the details. This can include working with an accountant to review local, state, and federal taxes and make sure the business is in compliance with them. It can also help a business that needs to pursue bankruptcy, which can be highly complex at the business level.

How Do Business Lawyers Help Companies Stay Within the Law?

There are a number of ways business lawyers help companies avoid legal issues that could lead to court sessions and hefty fines. These lawyers will monitor local regulations that must be followed, including getting the necessary permits and licensing. Many businesses today, large and small, need some sort of licensure to open, and they need that license to actually do business.

Business lawyers can also help a company work with copyright laws, another complex area. There are two angles to copyright law. The first is researching your business idea and name to make sure they haven’t already been created and copyrighted by someone else, which would put you in violation of their copyright. The second is making sure you have proper copyrights for any relevant products or names so that you’re protected from someone trying to copy your work.

How Do Business Lawyers Help With Employee Issues?

Having employees can lead to the need for legal services to protect both sides. A business lawyer will review contracts to make sure the company is not at risk from the actions of the employee. They can also advise on matters around compensation, issues of harassment and discrimination, and other topics, as well as how to communicate to employees about these issues.

If your company has employees that travel to foreign countries or you move out of the country even temporarily, a business lawyer can help you navigate the bureaucracy and governmental regulations around this type of employment immigration.

Let Us Advise You

Whether you have an established business that is facing unexpected legal challenges, you’re in the planning stages of starting a new business, or anywhere in between, our legal team is here to help. Call us at 317-663-9190 to learn more about the legal issues facing businesses and how we can provide assistance.