Location, location, location

Space requirements and layout

• Security systems and personnel
• Maintenance and cleaning services
• HVAC and energy efficiency
• Parking and shared spaces (gym, cafeteria, etc.)

Zoning  and land-use regulations

Financial considerations

Future growth and scalability

#2: Liquidated damages

#3: Consequential damages (A.K.A. special damages)

2. Brownfields and beyond: Real estate roulette

3. Pollution perils and endangered species: A regulatory roadblock

• Clarity: Clearly defined terms; clearly stated obligations and liabilities.
• Specificity: Precision in spelling out deliverables, deadlines, and payment terms.
• Monitoring and Updating: Regularly monitoring contracts for compliance and modifying them, when and as needed.

2. Intellectual property protections and noncompete agreements

3. Shareholder disputes

The sales process

1. Debtor markets assets to potential buyers
2. Debtor files motion with the bankruptcy court
3. Bankruptcy court approves sale of assets
4. Assets sold to winning bidder

Benefits of selling assets

Limitations of selling assets

Consider this before going into business together

• Is the decision based on personal loyalty or on demonstrated business acumen? Is the value of any potential contribution outweighed by the potential negative impact on the relationship? Would you be prepared to destroy that relationship if the survival of the enterprise required you to do that?
• Do you value the personal relationship more than any potential business outcome or your own personal success? The unfortunate reality is that many partnerships fail to survive the commitment involved in operating a successful business. Would your personal relationship suffer if the business failed and is that worth the risk?
• How would you divide responsibilities? A comprehensive written agreement must be put in place to establish the roles, duties and responsibilities necessary for the successful operation of the business. The absence of such a detailed contractual framework only serves to increase the likelihood of resentment, discord and disputes when one person feels that he or she is carrying more of the burden than someone else or is not being properly rewarded for his or her efforts.

• Business cash flow improves: As a result of the restructuring, cash flow improves because not as much goes to pay off debt. Now you have a bit more money on hand for your company to focus on business operations and secure additional revenue.
• The prevention of bankruptcy: Closing your business is the last thing you want to do. Restructuring allows you to now pay manageable interest rates while getting a second wind for your business.
• Securing much-needed lower interest rates: Many lenders want to see you succeed and keep the business running. They know what your company has successfully done in the past. Lower rates equate to lower monthly payments and less debt-related burden.

• Documents about the company and its structure – From the company’s organizational documents and corporate organization chart to updated minutes from the meetings of its governing body, understanding a company’s structure and internal governance level proceedings can give you a high-level understanding of its operations.
• The Company’s Assets – Assets that a company holds like real estate, manufacturing equipment and intellectual property including domain names, form the core of the company’s economic value, regardless of whether the ultimate transaction consists of a purchase of the company’s equity or the sale of all or substantially all of its assets. You should also examine those assets closely. The condition of real property (whether owned or leased), the age and condition of manufacturing equipment, and the expiration dates of intellectual property protections can limit the value these assets offer. Real property leases need to be examined to determine whether a sale of the company triggers the need to obtain the consent of any individual landlord.
• Financial information – One of the most appealing aspects of a company may be its profit potential, and financial information can give you a clear picture of that profitability. However, it is important to get updated information to ensure that you understand the company’s current finances. Footnotes to financial statements can raise significant questions the need to be answered as part of your due diligence investigation.
•  Contracts – What contracts are there with customers, vendors and suppliers? Which contracts are material to the value of the company and its continued operations?  Do any of those contracts need to be assigned and, if so, does consent of the contract counterparties to the assignment need to be obtained? Does the business depend on a supply chain? What steps have been taken to assure that the supply chain remains uninterrupted both before and after the company is acquired?
• Employee information – What does the company’s workforce look like? What benefits has the company promised employees? Did the company recently lose employees in key positions? Are some or all of the company’s employees unionized? Do any of the employees have employment contracts that contain severance benefits if those contracts are terminated? A company’s employees are an important asset, and you should consider them when evaluating a company.
• Licenses and permits – Is the company’s licensure up to date?  Which licenses are integral to the continued operation of the business? Are any licenses so integral that the form of the purchase transaction needs to be structured as a sale of the company’s equity rather than as a sale of its assets? In the case of a sale of the company’s assets, what steps need to be taken to acquire replacement licenses and what is the timing to obtain those licenses? In the case of a sale of the company’s equity, is any licensing authority entitled to approve a change of control? Does the company have the permits and authorizations needed in order to do business wherever it operates?  When will critical licenses expire and what is the renewal process?
• Insurance – Insurance is a key element of every business. You will need to review with your insurance consultant the proper forms of coverage and amounts, exclusions and deductibles. Cyber insurance is extremely important, especially for customer facing businesses.
• Litigation – You need to know whether any litigation is pending or threatened against the company and to evaluate whether any litigation, or threat of litigation, is a risk that you are unwilling to accept.
• Security – Especially for businesses that handle sensitive information or have intellectual property assets that need to be protected, you should examine the security used to protect that information and those assets. As All Business notes, this should include reviewing any privacy and cybersecurity risks that the business may face based on the business’s market.

• The name of the partnership
• Purpose of the business
• Names and addresses of the partners
• Capital and contributions of each partner
• Interest and ownership
• Management
• What to do when a partner chooses to withdrawal
• Dissolution

• Decision-making: How will the partners make decisions? Will it be through a voting process or will one partner be solely responsible for that?
• Capital contribution: Basically, what is addressed is how much money will each party invest in the business.
• Salaries and distributions: It address when will the partners take money from the account and how will they use that money. Will they use it to invest or to purchase things for the business?
• Death or disability: Partners must discuss what will happen to either one of them if they die or if they suffer a disability. What will happen to the company? What will happen to their shares?
• Dissolution: What exit strategies are available when the partnership ceases to exist? This is possibly the most uncomfortable to talk about yet essential if one of the partners does not want to be involved in the business anymore.