Building and growing a successful business requires navigating complex legal landscapes, particularly during foundational moments and significant transitions. At De Bruin Law Firm, we understand the challenges and opportunities business owners face because we are small business owners ourselves.

We focus our business law practice on providing strategic legal counsel and services in three critical areas: establishing the right foundation through Business Formation, planning for ownership changes with Buy-Sell Agreements, and guiding significant strategic moves like Mergers & Acquisitions. Our goal is to provide the clear, business-minded legal guidance needed to protect your interests, facilitate growth, and achieve your long-term objectives.

Business Formation: Building a Strong Foundation

Choosing the right legal structure for your business is one of the most critical decisions you’ll make. A well-chosen entity provides a strong foundation, influencing everything from daily operations and taxation to liability protection and your ability to raise capital. The structure you select—whether a Sole Proprietorship, Partnership (General, LP, or LLP), Limited Liability Company (LLC), S Corporation, or C Corporation—has significant implications.

Our attorneys help you understand the key differences and considerations:

• Liability Protection: Structures like LLCs and corporations are designed to create a separate legal entity, shielding your personal assets (like your home, car, and savings) from business debts and lawsuits. Sole proprietorships and general partnerships generally do not offer this separation, putting personal assets at risk.
• Taxation: Different structures have different tax implications. Pass-through entities (Sole Proprietorships, Partnerships, S Corps, most LLCs) typically pass profits and losses directly to the owners’ personal income without being taxed at the corporate level. C Corporations face potential double taxation (once at the corporate level and again when dividends are distributed to shareholders) but offer more flexibility for reinvesting earnings and certain stock benefits. We help you assess which structure offers the most advantageous tax treatment for your specific situation and goals.
• Administrative Requirements: Entities vary in complexity regarding formation paperwork, state filings (like annual reports), and internal governance requirements (e.g., holding annual meetings, and appointing a board of directors). LLCs often offer more operational flexibility than corporations.
• Raising Capital: Your ability to attract investors or secure loans can be affected by your business structure. Corporations (especially C Corps) are often preferred for raising significant venture capital due to their ability to issue different classes of stock.

At De Bruin Law Firm, we don’t just file paperwork; we counsel you through the selection process, ensuring your chosen entity aligns with your business plan, ownership structure, risk tolerance, and future growth aspirations. Starting with the right foundation can prevent costly pitfalls down the road.

Buy-Sell Agreements: Planning for Ownership Transitions

For businesses with multiple owners, a comprehensive Buy-Sell Agreement (BSA) is an essential planning tool, often compared to a “prenup” for business partners. This legally binding contract proactively addresses what happens to an owner’s interest in the company upon the occurrence of specific triggering events, ensuring a smooth transition and protecting the remaining owners and the business itself.

Key purposes and components of a well-drafted Buy-Sell Agreement include:

• Defining Triggering Events: The agreement clearly outlines the circumstances under which a buyout can or must occur. Common triggers include death, disability, retirement, divorce, bankruptcy, termination of employment, or an owner simply wishing to exit the business.
• Establishing Valuation: A critical component is establishing a clear mechanism for determining the value of the departing owner’s share. This avoids disputes and ensures fairness. Valuation methods can include fixed prices, formula-based approaches (e.g., based on book value or earnings multiples), or procedures for independent appraisals.
• Structuring the Buyout: The agreement details who has the right or obligation to purchase the departing owner’s interest. Options include cross-purchase (remaining owners buy the share), entity-purchase/stock redemption (the business itself buys the share), or a hybrid approach.
• Funding the Purchase: A significant challenge in buyouts is having the necessary funds available when a triggering event occurs. The BSA often outlines the funding mechanism. Common methods include life or disability insurance policies owned by the business or owners, setting aside cash reserves, establishing a sinking fund, or permitting installment payments. Planning the funding prevents financial strain on the business or remaining owners.

Without a Buy-Sell Agreement, departing owners (or their heirs) may be forced to sell their interest at a disadvantageous price, or remaining owners could find themselves in business with unintended partners (like a deceased owner’s spouse or heirs). Our attorneys work closely with business partners to craft tailored Buy-Sell Agreements that anticipate potential scenarios, protect ownership interests, and ensure business continuity.

Mergers & Acquisitions (M&A): Navigating Strategic Growth or Exit

Mergers and Acquisitions (M&A) represent significant strategic moves involving the consolidation of companies or assets. Whether you are looking to grow your business through acquisition, merge with a competitor, or plan your exit strategy through a sale, navigating the M&A process requires careful planning and experienced legal guidance.

Transactions typically take the form of either an asset purchase or a stock purchase:

• Asset Purchase: The buyer acquires specific assets (e.g., equipment, inventory, intellectual property, customer lists) and potentially assumes specific liabilities of the target company. The selling entity itself remains, potentially retaining unwanted assets or liabilities. Buyers often prefer asset purchases as they can “step up” the tax basis of the acquired assets for depreciation/amortization benefits and can be more selective about assuming liabilities, reducing exposure to unknown risks.
• Stock Purchase: The buyer acquires the outstanding shares of stock (for corporations) or membership units (for LLCs) of the target company. This means the buyer acquires the entire entity, including all its assets and liabilities, known and unknown. Stock purchases are often structurally simpler and faster but carry greater inherent risk regarding hidden liabilities. This structure is generally preferred by sellers for tax reasons (often resulting in capital gains treatment).

The M&A process involves several key stages:

• Due Diligence: This is a critical investigation phase where the potential buyer thoroughly examines the target company’s financial, legal, operational, and commercial standing to verify information, identify risks, and confirm valuation. Comprehensive due diligence is essential to making an informed decision.
• Negotiation and Documentation: Parties negotiate the terms of the deal, including price, payment structure, representations and warranties, and closing conditions, all memorialized in detailed legal agreements (e.g., Letter of Intent, Purchase Agreement).
• Closing: The final stage where legal ownership is transferred, purchase funds are exchanged, and the transaction is formally completed.

Our M&A attorneys guide clients through every stage of the process, from initial strategy and due diligence to negotiation, documentation, and closing. We help structure deals advantageously, mitigate risks, and ensure compliance, allowing you to pursue strategic growth or achieve a successful exit with confidence.

Whether you are launching a new venture, planning for the future of your partnership, or considering a major transaction, the attorneys at De Bruin Law Firm are here to provide the strategic legal counsel your business needs.