Thursday, October 25, 2018

Richard A. Kranitz, Esq., veteran business attorney, notes the emergence of sexual misconduct due diligence as a new issue in corporate mergers and acquisitions.


Richard A. Kranitz, Esq., veteran business attorney, notes the emergence of sexual misconduct due diligence as a new issue in corporate mergers and acquisitions.

            
“With the increase of high-profile sexual misconduct cases against high ranking corporate officers, buyers are increasingly turning more attention to social due diligence and including the so called ‘Weinstein Clause’ in their offer terms”, says veteran attorney Richard A. Kranitz.  The Weinstein Clause, a moniker originating from the widely publicized allegations against movie producer Harvey Weinstein, could refer to many different forms of a contractual clause ranging from escrowed funds against potential damaging claims arising after the sale to guarantees that there are no known claims of sexual misconduct against current high-level corporate executives.  The increasing use of the Weinstein clause highlights the concerns that many buyers have of later revealed damaging information.

Such concerns are also increasing buyers’ focus on social due diligence.  No longer looking just at financial information, prospective buyers are digging deeper into a company’s overall health, such as online reputation, social media presence, as well as potential outstanding misconduct claims or liabilities.  Increased emphasis on responding to sexual misconducts against high level corporate executives is a growing trend in the business world.  According to Temin & Co., a consulting group, corporations have drastically shortened the average time between report of alleged misconduct and dismissal from six weeks in mid-2017 to little over two weeks in mid-2018.

Some, however, are skeptical as to the real-life impact of increased efforts to mitigate risk from corporate sexual misconducts.  In an interview with the Washington Post, noted attorney Debra Katz welcomed the focus such efforts put on sexual misconduct, but was unsure whether it would have real life impact.  Ms. Katz noted that high number of sexual misconduct cases go unreported.  

Furthermore, if the misconduct was perpetrated by an executive at the highest level, efforts such as the Weinstein Clause may be unlikely to cause disclosure of information regarding the misconduct.

Even if there are hurdles such as calculations of damages in enforcing such a clause, the attention on the issue of unknown sexual misconduct by the seller in corporate M&A shows the increased significance of such issue.  It will take a multi-dimensional approach, including contractual clauses and deeper due diligence to address the issue of unknown sexual misconduct in corporate acquisitions. 


*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq

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Sunday, October 7, 2018

Richard A. Kranitz, Esq., experienced Business Attorney, stresses the importance of conducting a thorough Due Diligence prior to Business Acquisition.



Richard A. Kranitz, experienced Business Attorney, stresses the importance of conducting a thorough Due Diligence prior to Business Acquisition

            “Conducting a thorough due diligence before business acquisition is critical to a successful and smooth acquisition process”, says veteran attorney Richard A. Kranitz.  Some of the obvious areas of diligence would include existing contracts, payroll history, retirement account liabilities, and overview of assets and liabilities.  While most would-be business owners would understand the need for examining these basic, but critical, information, a more thorough review and analysis may be appropriate in certain circumstances.

            One such example would be acquisition of a business in a different state or even business with an overseas presence.  With exposure to different regulatory requirements in a new jurisdiction, the acquiring business would have to accurately assess its new obligations and exposures.  For example, a company dealing with sensitive consumer data would be subject to varying types of regulatory requirements in whatever state they do business in.  If such a business were to acquire another business in a different state, they would have to conduct a review to ensure that their existing compliance scheme meets the requirements of the new jurisdiction.  Even more complicated, if the acquiring business is new to handling sensitive consumer data, they may have to review the compliance scheme from scratch or build one from the ground up.  

            Overseas acquisition could be even more complex.  For example, the European Union has enacted General Data Protection Regulation (“GDPR”).  GDPR is widely considered one of the most sweeping and expansive data protection laws anywhere in the world.  Any acquisition of business potentially subject to GDPR would require an extensive review of data handling protocol to ensure compliance with the breadth and scope of GDPR.  

            While many acquisition due diligences focus on financial health and potential liability exposure of the acquired business, experienced attorneys will examine all relevant issues, including, but not limited to, regulatory concerns and multi-jurisdictional dimensions.  Thorough due diligence is critical to ensure that all potential issues and pitfalls are examined prior to the deal being completed and that post-acquisition operation is smooth and free of unanticipated surprises.
 


*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq

Wisconsin Business Attorney & Coach Richard Kranitz publishes series of business coaching articles



Wisconsin Business Attorney & Coach Richard Kranitz publishes series of business coaching articles

Motivational and instructional articles were developed during Richard Kranitz’ work as business coach for commercial businesses and their managers

Grafton, Wisconsin 2018 – Business attorney and coach Richard A. Kranitz, based in Wisconsin, has published of series of articles that he wrote during his work as business coach, when he coached entrepreneurs and managers how to better run their companies while enjoying the process.

Mr. Kranitz explains that “I have spent years learning and understanding the principles that underlie human behavior, particularly in the business world. Gradually, over time while coaching business managers to improve their performance, I condensed my experience and learning into a series of articles, which I am now making available on my Blog.”

Attorney Richard Kranitz recently launched a blog that provides commentary and analysis of complex Business Law, Securities, and Taxation issues as a service to the public. In that Blog, he is sharing the experience that he has gained in over 45 years of solving complex Business Law problems not only for individuals but also for businesses.

Mr. Kranitz’ Blog features legal analysis and commentary on significant court precedents, as well as regulatory developments.

Mr. Kranitz prides himself in being a counselor and mentor of business owners and managers, to encourage them to make positive and sustainable changes in their operations. He has served many years as an officer and director of firms in many industries, where he has assisted in business and strategic planning and problem solving to support growth with profits.

The series of coaching related articles include (key content in parentheses):

“Take the Key Step in Startup Success” (… Decades ago, most students of entrepreneurship believed that successful entrepreneurs had some rare ability that enabled them to build a rapid growth business - the ability to spot an opportunity that others missed - but in recent years, many who studied successful entrepreneurs have come to the same conclusion that I did from studying my more successful entrepreneur clients. They found an element that I found validated in my own experience in those companies that enjoyed sudden rapid growth. In most of those cases, the entrepreneur or startup team did one unique thing before they prepared their business plan. They performed a thorough feasibility analysis before they committed major funds. …). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-take-key-step-in.html
“How to Develop and Attitude of Abundance” (… But just as people often start from either an optimistic or pessimistic perspective, people can begin with an attitude toward scarcity or abundance. Which attitude a business owner takes along that dimension can significantly affect the likely success or failure of his business.  …). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-how-to-develop-attitude.html
“How Do You Grow Your Business?” (… Planning is an important part of achieving success in any business, but implementing those plans is critical. By meeting with the owner regularly to review progress and make adjustments, the business coach helps provide both motivation and accountability in implementing the plan.  …). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-how-do-you-grow-your.html
People - The Heart of Any Business” (… It proves the point that at the heart of any business are its people. Selecting the right people, placing them in the right spots, and facilitating their working together can build a strong business or turn an average one into a business that is great. Understanding their working styles is a key task in the process. Fortunately, there are some tools that can aid in accomplishing that task. One such tool is called a DISC assessment. Through having a job candidate or current employee fill out a detailed questionnaire it can generate a report that identifies certain key behavioral traits. This information can be used to select key personnel, assemble them into effective teams, and assist them to work together more effectively. ….). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-people-heart-of-any.html

Mr. Kranitz’ practice as a business coach ranges from helping business leaders to resolving daily business issues to challenging them to become the best business leaders possible. He helps them evolve strategic management skills so they lead the business instead of working in the business. He strategizes with his clients to create measurable goals, establish clear plans and deliver consistent follow-through.

The articles are available in full length on the Blog of Mr. Kranitz at https://richardkranitzblog.blogspot.com/
 


*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq

Richard A. Kranitz (Wisconsin), The Value Builder System, Why Startups Stall


Why Startups Stall

Have you ever wondered why startup companies stop growing? Sometimes they run out of potential customers to sell to or their product starts losing market share to a competitor, but there is often a more fundamental reason: the founder(s) lose the stomach for it. 
When you start a business, the assets you have outside of your business likely exceed those you have in it, because in the early days, your business is worthless. As your company grows, it starts to have value and becomes a more significant part of your wealth—especially if you’re pouring your profits back into funding your growth.

For most business owners, their company is their largest asset.

Eventually, your business may become such a large proportion of your wealth that you realize you are taking a giant risk every day that you decide to hold on to it just a little bit longer.

95% Of His Wealth In One Business

In 2000, Etienne Borgeat and Olivier Letard co-founded PCO innovation, an IT consulting firm. The company took off and, by 2016, PCO had 600 full-time employees and offices around the world.
As the business grew, Borgeat and Letard started to become uneasy about how much of their wealth was tied up in their business. By 2015, the shares Borgeat held in PCO represented 95% of his wealth.

That’s about the point that aerospace giant Boeing came calling. Boeing wanted PCO to take on a very large project and Borgeat and Letard turned down the opportunity reasoning that the project was so large it could risk their entire company if it went wrong. In the early days, the partners would never have turned down a chance to work with Boeing, but the partners had changed. 

That’s when Borgeat and Letard realized the time had come to sell. They agreed to an acquisition offer from Accenture of over one times revenue. 

The success of your startup is probably driven by your willingness to put all your eggs in one basket. You’re all in. However, at some point, you may find yourself starting to play it safe, which is about the time your business may be better off in someone else’s hands. 

*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq