Tag: Contracts

Selling Your Business?

John Smith owned a small manufacturing business.  One day he received a call from one of his competitors who said he was interested in buying John’s business.  John was now 75 and this seemed like the perfect opportunity for him to retire and have that “nest egg” for him live comfortably in retirement.

John met with the buyer and they discussed, in general, John’s business.  After the meeting, the buyer presented a letter of intent to John, which proposed a purchase price of $10,000,000, subject to the buyer’s due diligence investigation of John’s business.  John felt pleased with the letter of intent and signed and returned it to the buyer.

During a long and protracted (and quite thorough) due diligence, the buyer and his accountants and lawyers examined the business and its books and records.  Based upon their examination, they advised the buyer of various legal and financial risks that John’s business was exposed to and which could become issues that the buyer would have to face.

John could not produce all of his current contracts with his customers.  The contracts which he had contained provisions which could cause the contracts to be terminated upon a sale of the business or a transfer of the ownership of the business.  Their key employees had no employment agreements and could compete with the business once they terminated employment.  The leases for the business’s facilities could not be assigned.

Despite the issues with the business, the buyer was still interested in purchasing the business.  The bad news was that the revised purchase price was to be $8,500,000 with a significant portion to be held in escrow pending resolution of various legal issues.

The above scenario is very common with small business owners.  Bigger companies who regularly acquire smaller companies are “professionals” in the acquisition business.  They know exactly what to look for and they know how to “string the seller along” until they present a reduced offer which most sellers feel they have to accept.

If you are thinking of selling your business, make sure that your business is ready to be sold and that you have copies of all contracts and leases and that you understand what they provide and how they will be affected upon a sale.  Have written employment agreements with all your “key employees.”  Pay attention to your inventory, your accounts receivable and other assets which “drive the sales price.”  Protect your intellectual property by obtaining patents, to the extent applicable, and trademarks.

If you are considering selling your business and would like a “legal check-up,” please do not hesitate to contact:

Morris Saunders at:

msaunders@lgattorneys.com or 312-368-0100.

New Cook County Wage Theft Ordinance Applicable to Cook County Employers as of May 1, 2015

On May 1, 2015, employers in Cook County will be subject to the new Cook County Wage Theft Ordinance that imposes harsh penalties on employers who violate federal or state wage laws. The purpose of the Ordinance is to protect employees from wage theft and prohibits companies and individuals found to have violated wage-payment laws from obtaining Cook County procurement contracts, business licenses, or property tax incentives for a period of five years.

An employer will face penalties under the Ordinance if it has admitted guilt or liability, or has been adjudicated guilty or liable in any judicial or administrative proceeding, of committing a repeated or willful violation of the Illinois Wage Payment and Collection Act, the Illinois Minimum Wage Act, the Illinois Worker Adjustment and Retraining Notification Act, the Illinois Employee Classification Act, the federal Fair Labor Standards Act, or any comparable state statute or regulation that governs the payment of wages.

The Ordinance applies not only to business entities, but to any “person”, including a “substantial owner” or an employer. A substantial owner is defined as any person who “owns or holds a 25 percent or more percentage of interest in any business entity seeking a county privilege, including those shareholders, general or limited partners, beneficiaries and principals; except where a business entity is an individual or sole proprietorship, substantial owner means that individual or sole proprietor.”

Penalties under the Ordinance include:

  1. Ineligibility for County Contracts:  The employer will be ineligible to enter into a contract with Cook County for a period of five years from the admission of guilt, date of conviction, entry of a plea, or finding in a judicial or administrative proceeding of a violation of a wage-payment law.
  2. Ineligibility for Property Tax Incentives: The employer will be ineligible to receive any property tax incentives for a period of five years from the admission of guilt, date of conviction, entry of a plea, or finding in a judicial or administrative proceeding of a violation of a wage-payment law.
  3. Ineligibility for a Cook County Business License: The employer will be ineligible to receive a Cook County business license for a period of five years from the admission of guilt, date of conviction, entry of a plea, or finding in a judicial or administrative proceeding of a violation of a wage-payment law.

Employers who are subject to the above listed penalties may request an exception to the applicable period of ineligibility by submitting a written request to the County. Such exceptions may be granted by the County if the County finds that the exception is in the best interest of the County.

Employers in Cook County should review their wage payment policies to ensure that they are in compliance with all applicable federal and state wage-payment laws.

If you have any questions or concerns regarding the Cook County Wage Theft Ordinance or your business’s wage payment policies, please contact:

Kristen E. O’Neill at:

koneill@lgattorneys.com or (312) 368-0100

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