Huntley Legal's Blog

Bootstrapping is quite common for startups, entrepreneurs and fledgling businesses who have little or no funds. They try to avoid spending while they get their business established. Often, they can’t get investment until they reach a certain point, so they want to get by ‘on fresh air’ until the money comes in.

This is perfectly understandable, and can be wise, but trying to save money on legal matters early on can lead to unhappy outcomes in future.

Things people do in an attempt to save money...

Traditionally, a management buyout happens when managers who are already embedded within the company decide to borrow or spend money they already have to buy the company they work in.

That’s the simplest end of it, and this type of management buyout still goes on.

In recent years, many management buyouts are really private equity deals that are managed by private equity investment funds. Either they get involved with the management team that stays on, or they bring in their own management team. As part of the deal, the existing management team, or the implanted management team, will take a part of the equity in the company as part of their pay – which is seen as a way to tie their interests to the success of the company after the deal.

There is also the intriguingly named ‘bimbo’ crossover arrangement. That’s a combination of a management buyout and a management buyin, where the new owners keep some of the existing managers, and bring in some of their own, and also provide some money to take the business forward.

In this article, you’ll discover when and why you might take on an existing business-to-business contract as a supplier. Obviously, the advice is a little different if you are the customer in the relationship. Perhaps I’ll write about that another time.

If you don’t know your duties as a company director, it’s at your own risk.

Director duties arose out of different sets of law. Historically, they were covered by case law and common law that had derived from trust law. As a result, director duties became complicated and hard to pinpoint. They were quite well recognised by lawyers, but not so much by directors.

The Companies Act of 2006 aimed to clear it up, by establishing seven key duties that are now simply put in statute so you don’t need to check any further.

Here’s what company directors must do:

In recent months, I’ve helped several clients with their contractual arrangements. Although the details of the problems were quite different, they all shared the same underlying problem. They didn’t keep a constant watch on the basics.

Being vague about contractual details, or failing to check them properly, can lead to dire consequences, delays, disputes and extra costs.

This article explains the key points you need to know… and then keep checking… even when you are sure you know them.

You might well be asked to stand as guarantor for a company – this happens to many business-owners, especially when their company is new, expanding, or needs higher-than-usual levels of borrowing.

When the bank or lender needs a guarantor, the obvious candidate is the business owner. That's because you are expected to show confidence in your company's plans and prospects. In fact, it would be hard to explain why you wouldn't stand as guarantor.

If this happens to you, here are some of the things to consider.

Just because you have a contract in place doesn't mean you are stuck with it forever.

There are many reasons why you might want to vary a contract. Obviously, things can change since you signed the original agreement.

If you're the customer in the relationship, maybe business has developed so you need to order more goods or increase the service level you require. If you're the supplier, you might want to change your pricing structure at some point.

This is all quite normal.

When selling a business or a company, it's routine to grant warranties on core issues such as:

• Your books and records being up to date
• Proper insurance and accounting matters
• Contractual trading relationships in place
  

As a seller, you need to know that potential buyers won't (or shouldn't) complete the deal if you are not prepared to provide them with such warranties.

However, if you're looking for a speedy sale, it's not unusual to do little or no due diligence as you aim to sign the documents with no fuss as quickly as possible.

This cautionary tale brings home the risk to the seller.

Whether you're launching a new business or taking over an existing one, you might be looking at the business name.

Any business needs to have a formal company name, a domain name, and a name it's commonly known by for trading and branding.

For practical purposes, it's good to have a consistent link between the brand name, the domain name, and the official company name.

In this article, you'll discover what to do before and after you choose a business name.

Imagine this scenario.

You provide B2B services. You've won a new client – hoorah! The client wants to work with you for several years – yay, there will be dancing in the streets!

So you put a written agreement in place.

The agreement will cover how much they should pay, and when, and how. It's also likely to include a termination clause, to allow for the client to end the working relationship at some point.

Let's imagine they ask for a 60-day notice period after year 1, and you accept this. Your annual charges to the client will no doubt be based on you getting a whole year of work, even you agree to accept monthly payments.

However, has this payment structure and termination clause been thought through properly and written clearly?

This article covers some of the issues to consider.