Case Studies - Corporate Law and Business Transactions
Complex Business Divorce for a Construction Company
A new partner in a construction company soon learned his partner, previously the sole owner, had been mismanaging the business for years. Assets were less and liabilities greater than had been reflected on the company’s books. Garson Claxon represented the “good partner” who wanted to salvage his investment while protecting the company and the jobs of its nearly 100 employees.
The Garson Claxton team worked quickly on multiple fronts. A lawsuit to dissolve the partnership was filed in order to force the “bad partner” to address the company’s problems. At the same time, our attorneys began renegotiating the partnership agreement and preparing for the possible sale of the business to a third party. In the end, the sale to a third party was accomplished. The Garson Claxton client recovered his investment, remained to manage the company for the new owners, and was able to save the jobs of most of the company’s employees.
Negotiating the Sale of a Business and a Job with the New Owners
We had counseled this client for years, served on the client’s advisory board, and provided a variety of legal services. When it came time to sell its main business, our client chose Garson Claxton to lead the negotiations, structure the transaction, and obtain the most favorable deal possible. To protect our client’s relations with the purchasers, with whom our client would continue to work after the sale, we handled all negotiations. Despite a downturn in our client’s business during the negotiations, we were able to negotiate a seven-figure increase in the sales price and we capped our client’s exposure to any post-closing claims by the purchaser. In the end, we achieved the goal of both enhancing the deal for our client and preserving our client’s relationship with the new owners of the business.
The Business “Divorce” & New Beginnings for a Medical Group
We were retained by a group of doctors who had signed complex and (as they subsequently came to realize) disadvantageous “partnership” agreements when they joined a larger practice. Our clients asked for help in leaving this practice. We were able to negotiate a six-figure reduction in the “exit fee,” as well as releases from guarantees on loans and non-competition obligations. We assisted the clients in establishing their new business, including the selection of the appropriate new company entity, the creation of organizational documents and agreements, the hiring and retention of staff, and the drafting of a buy-sell agreement among the doctors.
Drafting the Right Customer Contract
Our client provided security-related services to consumers. Because of the nature of the services provided, the business was exposed to potentially unlimited liability to its customers. At the same time, non-payment for services which already had been rendered was a significant problem for the company. In short, our client faced uncertain prospects due to the twin pressures of potentially unlimited liability and excessive non-payment by customers. To help stabilize the business, we first researched and implemented effective means of limiting our client’s liability exposure, including appropriate disclaimers and caps on liability. We then enhanced the collectability of our client’s accounts receivable by adding provisions for attorney fees, interest on unpaid sums, and a convenient and inexpensive forum for resolution of disputes in the event of consumer non-payment. Simply by implementing these changes in its consumer contract, our client substantially enhanced the value of its business.
Resolving a Meeting Planning Dispute
Our client, a travel agency, called on us to help resolve a dispute over conference arrangements our client had made. The conference was poorly attended, and the company hosting the conference wanted our client to help pay attrition fees owed by the host company under its hotel contract. Worse yet, the host company was planning to replace our client on future conferences already under contract. We reviewed all of the contracts and sent the host company a compelling demand letter that set the stage for a favorable settlement. Under the settlement, our client received a termination fee, preserved its hotel commissions under the contracts for the pending conferences, and obtained a blanket release of any claims that the host company might have. We took our client from defense to offense and arranged a favorable conclusion for a soured relationship.
Merger of Travel Agencies
Our clients owned separate travel agencies. The combined effects of a declining economy, commission cuts, and other supplier actions, made them realize that they had to restructure their businesses to survive. They did not want to be bought out by a mega-agency, so they decided to merge, with each party owning 50% of the business. The first travel industry lawyer they approached refused to help them because he thought that a 50-50 ownership structure was doomed to failure. Then they came to our attorneys. We counseled our clients regarding all of the issues they would face under their proposed structure: legal, business, and social. We also carefully crafted the merger and governing documents they would need to make their plan a success and provided them with the “prenuptial” agreement that would address the situations that were likely to arise. The new entity has been in business for more than five years and is a success.
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