Signing off and over to a new Blog!

Barriston LLP is introducing a new Getting Business Done Blog - with contributions from all of our business law lawyers! I think this will be a great opportunity for readers to hear from more than just boring old me! I hope that you will continue to follow us at http://gettingbusinessdone.posterous.com Thanks for reading! Joanne McPhail

Keeping Secrets Secret

Thinking about selling your business? Perhaps you have entered into informal discussions with a possible buyer. The buyer is looking for some more detailed information about your business in order to decide whether he wants to make you an Offer. Maybe he wants some past financial records or other confidential information in order to determine price. How do you give him this information, before the deal is even made? Using a Nondisclosure & Confidentiality Agreement can be helpful. It will outline the terms upon which you agree to provide certain confidential information, and it will set out how it can be used, to whom it can be disclosed and when it has to be returned. This can be a separate stand-alone agreement, or similar wording can be incorporated into a letter of intent, where the parties at least agree that it is their intention to buy and sell and they will be entering into negotiations in this regard. The agreement, no matter the form, will help to clarify the rights and obligations of the parties, and may assist with narrowing down some of the issues to be resolved before a definitive Agreement of Purchase and Sale can be drawn up. Being careful with your business secrets just makes good business sense.

WSIB and Owners of Corporations

I recently had a corporate client that went through a WSIB audit. The corporation was incorporated a few years ago, by a husband and wife. When they incorporated, they made the wife the sole officer and director of the corporation. The company paid WSIB premiums on all of its employees, but did not pay premiums on the husband and wife. The WSIB auditor assessed the company for all past payments for the husband, on the basis that he was not listed in the minute book or on the public record, as an officer of the company. This seems to be the test. Even though the husband was certainly a directing mind of the company and making all decisions on an equal basis with his wife, and was also a fifty percent shareholder, he was still deemed to be an "employee" and the company was required to pay WSIB premiums on his behalf. Something to consider, if your business is subject to WSIB. The client is in the process of appealing the decision, so I will keep you posted!

Georgian College's International Business Management Program can help your business!

I was recently contacted by one of the profs in this program at Georgian. Each student in the program is required to produce a business plan to take a domestic product or service to an international market, other than the US. In the past, students have worked with local businesses who have given them access to information and time with staff to create real life scenarios. A couple of students have gone on to win a national award for their work and some students have been hired by their clients as interns to enhance or implement elements of the business plan afterwards.

The ideal business is one that has a product currently sold in Canada. The size of the business does not matter as award winners have been a very small business and a medium sized business.

For small businesses with unique products this is an excellent opportunity to look at the possibility of exporting the product to international markets and gaining some knowledge on the process. With the added bonus of supporting local education at Georgian! A win win situation!

Reps & Warranties on a Share Sale

Today I spent some time working my way through a share purchase agreement, largely amending it to narrow the representations and warranties that my client was being asked to give, on the sale of his shares to another shareholder of the same company. The buyer actually has a great deal of knowledge about the company, and is involved in its day-to-day operations. In this context, it is very important to examine what each of the parties has knowledge of, how much risk the purchaser will bear and how many assurances the vendor will give. This is often a major area of negotiation between the parties, as there is usually a time period, after the sale, during which a purchaser can sue a vendor for any representation or warranty that was false. If you are buying or selling shares in a company, this is an important area to review and on which to obtain legal advice. It just makes good business sense.

Women in Business Awards 2011

Last week I attended this event to congratulate several business women in Barrie. In particular I want to congratulate Patricia Lechten, who won Business Woman of the Year this year, and is a fellow member of a women's business group I am involved with! Very exciting indeed! Congratulations to Patricia and all of the nominees!

Do You Have a Built In Buyer for Your Business?

I have coincidentally fielded three phone calls from clients in the past week, discussing the possibilities around selling their business to an existing employee. This can be a really good idea, provided the employee is prepared to pay fair market value for the business, and you are prepared to, perhaps, take payment over time. Often, a structured buy in can be negotiated, where the employee purchases a percentage of your shares of your business each year, slowly taking over the business. Of course, there are many issues to be considered. Even minority shareholders have rights, so you will want to be sure you have a shareholders agreement in place which sets out the rights and obligations of the shareholders, and clarifies roles. You will also have to consider how you might get the shares back if the employee, for instance, buys 10 percent of your business and then leaves or is terminated. But the employee likely knows your business and may make the perfect buyer if you can negotiate mutually agreeable terms. It's worth a look inward to see if the buyer of your business may actually be sitting in the office next door. Thinking ahead and planning your exit strategy makes good business sense.