One of the most interesting trends we’ve seen as the transition from a fully Covid business world to a recovering one continues to be the number of new opportunities available because of the relative value seen from potential investors, especially those with cash on hand, from businesses that have historically been well positioned but have struggled in this environment.
If you’re an investor or a small business owner looking for additional opportunity, what should you be considering? There are of course a myriad of additional questions to consider from my Las Vegas business lawyer perspective, but the most ideal place to start is what are your personal preferences? This article, “Investor, Partner or Vendor – How to Contribute to a Company and Benefit By It from Larry Donahue at Law For Small Business, helps frame the considerations quite well and offers an excellent list of questions to evaluate the options available. Here’s an excerpt below:
• Reimbursement? Do you want to be directly (or quickly) paid back for your Contributions, or are you willing to “donate” all (or a portion) of your Contributions for potential long-term gain?
• Risk Adversity? Are you risk adverse or otherwise concerned about liability attaching to you from the company? Is the company doing something particularly risky, or are you unsure of the other owners and want to be careful? (Read, What is Piercing the Corporate Veil?)
• Time to Devote? Are you able to devote your full-time attention to the company, or only part of your time, or no time at all?
• Visibility? Do you have other loyalties or perhaps are you employed by another company, and don’t want to create problems with someone else?
• Tax Concerns? Are you okay waiting to file your personal taxes until you receive a K-1 from the company? Do you trust the company to deliver K-1’s on a timely basis? Do you have other tax issues that could complicate the picture?
• Status of Contributions? Are you permanently handing over your Contributions to the company, or are you expecting your Contributions to be returned to you if you are no longer associated with the Company? Can the company license, transfer, create derivative works of, or sell your Contributions? Do you want the right to “buy back” your Contributions under the right circumstances?
As Larry points outs, everyone is different, is looking at different objectives and goals, and has a different tolerance for time, patience, contribution level, structure, and more. As you dive into any potential opportunity, keep these questions in mind and consult your Las Vegas business lawyer for answers, as well as additional questions you should be asking. Gordon Law stands ready to help you.
Gordon Law is one of the few boutique firms to practice business law for small-to-medium sized businesses and their owners in Las Vegas and throughout Southern Nevada, and one of the only law firms of any size to deliver the right balance of personal attention, aggressive representation and business expertise.
Aviva can be reached at 702.527.5557 or via email at agordon@Gordonlawlv.com. You can also visit GordonLawLV.com to learn more about her Las Vegas Business Law Practice.