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Innovative Legal Strategies

Howard County MD Business Law Blog

Planning to sell a business or pass it to heirs

Maryland business owners may not think they need to consider what they will do when they are ready to retire or leave their company because it is far in the future, but all business owners need to have an exit plan in mind. Failing to plan can mean scrambling at the last minute to sell the company and only being able to do so for less than it is worth. For business owners who hope to leave their company to a family member, it is advisable to put documentation in place to smooth the transition.

A living trust can be an excellent way to protect the assets of a small business for heirs. Property, copyrights and patents can all be placed in a living trust, and if the company operates in more than one state, a living trust means heirs will not have to go through probate in those states. However, owners should keep in mind that some types of businesses may be more difficult to place in this type of trust. For example, a majority of its owners must agree to put an LLC into a living trust.

Why companies should include HR leaders in business planning

Maryland businesses engaged in strategic planning may do wise by including human resources leaders in their companies in the planning process. An increasing number of major companies are doing just that, and there are several good reasons why they now do so.

One of the biggest reasons a CEO should consider bringing HR professionals into the planning fold is because they understand what the company's gaps in skills are. By receiving information from HR, companies can better plan for talent-acquisition strategies and plans. They can also be better equipped to write their succession plans with the information.

How the strategy plan model helps Maryland startups

An entrepreneur who starts a new company will usually create a business plan. However, some believe that it is better to use a strategy plan instead. While they both guide how a business makes decisions, the strategy plan can be more flexible and dynamic. It may work better for new companies that may be growing and evolving at a rapid pace.

With a business plan, the creator of a startup is creating a document based on what the market has done in the past and what it may do in the future. This may be a flawed way to approach building a new business because what the market is projected to do and what it actually does are often two different things. It may also allow a new business owner time and space to procrastinate whereas the strategy plan creates pressure to follow through on future initiatives.

Federal court rejects appeal to award $96 million to Chevron

On Aug. 4, a federal appeals court rejected a challenge from the Ecuadorian government to an award of $96 million to Chevron Corporation. Individuals in Maryland who follow the oil industry probably know that the energy giant has been in a dispute with the South American nation for decades over oil field development.

Texaco, which Chevron acquired later, made a deal in 1973 with the Ecuadorian government that allowed it to develop oil fields in the country as long as it sold oil at less than market price. In the 1990s, Texaco filed multiple lawsuits that claimed Ecuador violated the contract. Chevron began an arbitration proceeding in 2006 at The Hague's Permanent Court of Arbitration, claiming that the courts in Ecuador did not to settle the legal actions in a timely manner, which was a breach of treaty between the two countries.

Business owners must plan their own retirements

Maryland entrepreneurs might be interested to learn that, according to a survey conducted by TD Bank, 47 percent of all small business owners do not have any sort of retirement plan. Many operate under a vague notion that a future sale of the business will provide for their retirement, but fail to specifically define their plans. With the right business planning, though, small business owners can build wealth for retirement at the same time that they build their operations.

When entrepreneurs retire, something must be done with their businesses. Thus, among the first steps in preparing for retirement is deciding on an exit strategy. Often, it's as simple as handing over the keys to a family member or closing the doors and selling the assets. The TD Bank survey indicated that most small businesses are organized as sole proprietorships.

Planning for business disruption in Maryland

Many Maryland businesses run into small issues on a day-to-day basis, such as an employee quitting unexpectedly or a shipment failing to arrive on time. While most organizations have steps set forth to deal with these types of problems, many do not have a plan for dealing with large complications, like a major computer failure or an unexpected weather event.

Some of the large-scale problems that businesses may face include damaged premises, a disturbed supply line or problems with cash flow. Each of these issues can lead to a business failing, but having a plan of action in place could reduce the disruption and salvage a company's operations.

Teenage Mutant Ninja Turtles in court

Maryland movie fans might be interested in the details of a case filed in a California civil court. Six plaintiffs are claiming they have been denied contractually-mandated payments from the profits of the three Teenage Mutant Ninja Turtles films released in the early 1990s. The plaintiffs are seeking damages of more than $3.175 million for breach of contract and other causes of action.

The first movie, "Teenage Mutant Ninja Turtles", was released in 1990 and grossed more than $200 million. "Teenage Mutant Ninja Turtles II: The Secret of the Ooze" was released in 1991 and grossed $78.7 million domestically. The last of the three initial TMNT films was released in 1993 and took in $42.3 million. Neither the 2007 animated film nor the 2014 Michael Bay feature is part of the lawsuit.

Contract fight ends with auto dealers breaking ties

Maryland drivers in search of new vehicles may to reassess their buying options following a split between TrueCar Inc. and AutoNation Inc. According to reports, the firms are set to end their partnership, and the breakup is projected to impact more than 200 AutoNation dealerships that employ TrueCar services. TrueCar, which provided sales leads to AutoNation and other companies via its web portal, was accused of requesting large volumes of consumer purchase data, and it also faces a number of lawsuits brought by other parties in the retail auto business.

News sources say TrueCar is well known for breaking ties with dealerships that refuse to agree to its data-sharing terms. The company, which had already come close to shutting its doors in 2012 as a result of investigations by authorities in several states, continued to push for contract provisions demanding that AutoNation hand over customer information about every one of its transactions, regardless of whether TrueCar was involved.

Timing the sale of a business

A Maryland entrepreneur who is starting a new business may want to think about the possibility of selling it in the future. People decide to sell businesses for many reasons, including loss of interest, dysfunctional relationships with partners or just simply because the time seems to be right. By providing plans from the beginning of how such a sale will be handled, business owners can avoid a lot of potential headaches while also maximizing their profits in the event it occurs.

There are several areas that should be addressed in a business plan to make certain the business is sale-ready. People should think about the business in terms of what a buyer would want, including business profitability, having a competitive edge, degree of systemization, how scalable the business is and the business's culture.

Protection with business planning for continuity

Many successful business owners in Maryland and across the U.S. have a low threshold for risk during economic downturns. While this is important, there are also other types of risk that require more specific planning. Natural disasters, closed transportation routes and cyber attacks are all examples of events that can leave even the most conservative and tightly run business scrambling for solutions. For this reason, a continuity plan can be an essential part of business administration.

For those just getting started with a plan, the first step is uncovering risks. This could be as simple as determining how to handle office fires or other disasters that could destroy a base of operations and critical documents. Most businesses have some aspect of continuity planning in place already, but the goal is to expand business planning to cover the widest range of risks.