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Maybe you’re a business owner whose company is humming right along, all cylinders firing, prospects look good. Or maybe your company is facing increased competition, higher costs, and lower profits that hinder growth and expansion. Either way, another company or investor may approach with a merger or acquisition proposal. What factors should you consider if your company faces this dilemma? Merger vs. Acquisition. A merger is when two companies join together, even if one company has made the first move. Typically, a new company will be created with all or part of the original companies included. An acquisition is similar. When one company   acquires ...
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The intangible nature of intellectual property makes it difficult to protect. You can’t just park a security guard next to your intellectual property to keep people from stealing it. In fact, intellectual property (“IP”) has been   defined   as “… a collection of ideas and concepts…”  Though harder to protect than your company’s computer equipment or warehouses, business owners and innovators still have ways to safeguard their IP assets from theft or misuse. Copyright Protection A   copyright   protects original works of authorship, including novels, songs, computer software, and architecture. It does not, however, protect “facts, ideas, systems, ...
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Fine print. Seems like contracts are full of it. The clauses and provisions that make up a contract each have a specific purpose, though. Indemnification, for example, is often used to protect a party to a contract. That may sound simple, but can be complicated and costly if entered into lightly. Indemnify means to compensate an individual or entity for a specific loss or damage. In some contracts, you might be the person being indemnified. In other contracts, you may be the party indemnifying another. Indemnity agreements are common in contracts between businesses and even between governments. Indemnification in Action An insurance policy is technically ...
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Family business ownership is an integral part of American history and commerce. In fact, about 90% of American businesses are family-owned. Business and families have varied purposes, so it should come as no surprise that certain business entities offer greater protection to family-owned enterprises. Of course, there are pros and cons to any of those entity types, including family limited liability companies. The Family Limited Liability Company You may have heard of family limited liability companies (FLLC) and their first cousin, the family limited liability partnership (FLLP). The structure is essentially the same: The FLLC or FLLP is established, ...
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A merger is a deal where two companies join together as fairly equal partners. Sometimes the two companies involved simply form a brand new company. Other mergers result in the merging of previous names into a new name. For example, when America Online (AOL) merged with Time Warner in 2000, the company they formed was called AOL Time Warner . An acquisition, however, is typically a larger company buying or otherwise acquiring a smaller company. Some companies may merge their identities. Sometimes, however, the smaller company is simply absorbed by the larger company, becoming part of its brand and identity. Why would two companies want to cede control ...
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A contract is more than a piece of paper signed by two or more parties. It is a legally enforceable agreement. So, what can make a contract unenforceable ? Mistakes All contracts need at least the following elements to be enforceable: An offer and acceptance of that offer, A specific subject or purpose, and  Consideration. Sometimes mistakes happen in contracts. Some can cause the contract to be unenforceable, especially if the mistake involves one of the major components of the contract. Perhaps two parties, Bob and Dan, sign an ambiguous document they hand wrote and called a contract. However, though their grammar was perfect, and ...
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Smith & Sons, Inc., had been in business for several generations. The current CEO, Henry S., had concerns about the company’s viability. Henry weighed his options carefully. One possible solution involved selling the family business. Reasons to Sell Selling your family business may seem like the best option if you are faced with these problems: Difficult family relationships . Sometimes family members involved in the business just don’t get along. Every decision turns into a fight, and it’s hurting your business. At some point, selling the business may seem like the best solution:  everyone can take their share of the sales price and ...
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It all starts with an idea. The idea grows into a plan, then a business. Somewhere along the way, the budding business owner picks a business entity. It may all come down to whether he or she should form an S corporation or a C corporation. Formation All corporations are required to file formation documents with their state government. By default,   all   corporations are C corporations. A corporation must file an election to go from “C” to “S.”  According to the IRS, corporations that meet the following criteria can qualify as S corporations: Be a domestic corporation, Consist of shareholders that are individuals, certain types of trusts, and ...
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Updating Your MSA

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Master service providers, or MSPs, manage the IT infrastructure and end-user systems that keep their clients’ companies humming. What keeps your MSP-client relationship running without a hitch? A good master service agreement (MSA)! Just like you need to keep your client’s software and operating systems current, it’s important to keep your MSA up-to-date. In fact, if you are an MSP, updating your MSA should be a priority ticket in your job queue. MSA Basics An MSA is a document that memorializes the agreement negotiated between an MSP and its client. A statement of work (SOW) is not the same as an MSA. The SOW covers a specific project while the MSA ...
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As a successful business owner, you’ve worked hard to get where you are. You know all about sweat equity and sleepless nights. So, doesn’t it make sense to want your business to continue after your participation in it ends through retirement, incapacity, or death? Having a good business succession plan in place could keep your business on track. Without a business succession plan in place, however, your business could quickly derail. What is a business succession plan? Your company may be able to survive and thrive even without you, but it needs help. That’s where the business succession plan comes in.  In order to have the succession plan work fluidly, ...
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Every business has a structure or an entity type. So, one business might be a professional corporation, another might be a sole proprietorship. When it comes time to choose the structure your business will use, it’s important to distinguish between entity types. After all, there are advantages and disadvantages to each. One of the most common business entities is the limited liability company or LLC. Another is the corporation. Though similar, there are some important distinctions that we’ll discuss in this article.  Books have been written dealing with the distinctions between these entity types so this article is only intended to start a conversation.  ...
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Right of First Offer vs. Right of First Refusal, which generates a more fair result. By Thomas M. Fafinski   Most of us are familiar with the right of first refusal ("ROFR") but not with the right of first offer ("ROFO").  Generally, a ROFR is advantageous to the purchaser and the ROFO is advantageous to the seller.     With a ROFR, prior to selling your interest to another, you must first allow an existing partner (or other person holding the right of first refusal) the opportunity to match the offer.  Ordinarily, there is a notice component and an obligation to allow the holder of the right to match the offer for a period of time.  The problem with ...
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Protecting Against Ransomware Attacks Cyberattacks are on the rise. In addition to hacking, managed service providers and their clients must now be on guard against evolving cyber-risks, including ransomware is becoming more prevalent. In 2017,   ransomware payments   totaled about $2 billion, which was about twice the 2016 figure. As Managed Service Providers (MSPs) provide management of IT systems, they may need to include proactive defense against cyberattacks to protect their clients and reduce their own liability. How Ransomware Works. Understanding how ransomware works is key to stopping it. An entity gains access to a user’s computer system. ...
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By Thomas M. Fafinski There was a split between several of the Federal Appellate Circuits regarding the registration requirement of copyright infringement suits.  Last week, the United States Supreme Court resolved the split and will likely impact the number of applications being made with the U.S. Copyright Office.  Importantly for MSPs, there is an opportunity to increase your leverage in settlement discussions involving former employees using your protected information. Pursuant to the Copyright Act, copyright protection attaches to original works, i.e. literary, musical, and dramatic works which are “fixed in any tangible medium of ...
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Many professional service companies use master service agreements with their clients. A master service agreement contains important agreements that have been negotiated with the client. Being clear about the goals of your master service agreements could prevent problems later in your business relationship. What Can a Master Service Agreement Do for Me? Getting your agreements in writing provides a number of benefits for both parties: Manages Risks . All MSAs contain concrete details, in writing, of the parties’ agreements. Limitations of liability are common in MSAs, which could reduce the risk of litigation. There’s less possibility that a project ...
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Author: Thomas M. Fafinski, Attorney/Partner, VIRTUS LAW, PLLC   Most managed service providers ("MSPs") exert their efforts on their offense.  Little attention is spent on defense.  The illustration above depicts an unbalanced approach which sacrifices defense (depicted in red) in exchange for sales/offense (depicted in green).  The barriers to entry in the marketplace are very low and generally deal with technical knowledge.  If you have the technical knowledge, then you have little difficulty entering the market, normally starting as a consultant.  The start-up MSP is pre-occupied with creating an offense - trying to find streams of revenue to allow ...
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