Monthly Archives: February 2018

Misiano Law’s Top 8 Considerations When Buying or Selling a Business

Selling Your Business

James F. Misiano, P.C. has represented hundreds of entrepreneurs throughout his career in either purchasing or selling a business, so he’s learned a thing or two.

Here are his hints and questions to consider for both purchasers and sellers:

1. Is the Business What it Seems?

If you find a business you think you would like to own, make sure it is what you think it is. This may sound like simple advice, but it is routinely ignored. You must vet the business before buying it!  How? First, ask the operating owner to allow you to shadow him/her over the course of two weeks. This way you can see whether you have the physical stamina and mental acuity to handle the management of its operations.

2. Look and Listen

Observe firsthand the employees and key management people. Do they know what they are doing, or are they incompetent friends and family of the owner?  Is your style and their management style compatible?  Do the employees get along or are you buying a hornet’s nest?  What is the corporate culture?

3. How Much Money Are They Really Making?

What is the business grossing in income?  Netting?  Unless you’re a forensic accountant, you may need some help on this one.  Aside from hiring an accountant that specializes in this type of investigation, you too should look at cash receipts, bank deposits, and past bank statements. Those figures can’t lie; the owner can. Do a judgment and lien search on the company to see if there are liens against any equipment, or tax liens, judgments, and liabilities.  This may tell you if the business is in distress. You may enjoy revitalizing a depressed business, but make sure the purchase price reflects that.

4. Be Careful of Leases

If you are negotiating a new lease with the current landlord, be sure to inform the landlord that the tenant will be a corporation as you want to limit personal exposure. The landlord may want a personal guarantee, but I would advise against this. However, if you feel it is a must, either to get the space or because you think the risk is worthwhile, be sure to limit the time frame of the guarantee and get a “good guy” clause in the lease. This will essentially allow you to be released if you surrender the security, are paid up to date on the rent, and the premises are in good condition when you surrender the key.

5. Hire a Business Broker

When selling, get a good business broker that has some experience in your type of business. Put the business up at a reasonable sales price. There are standard multiples in certain businesses depending upon their yearly gross. Decide if you want to finance part of the transaction, for how long do you want to finance the note for, and at what interest rate.

6. Obtain a Guarantee

If you do finance the business purchase, try to get a personal guarantee on the promissory note. Get security, either on the business equipment and/or accounts receivables, or even secure it by a mortgage on the purchaser’s home or other property. Be sure to take back an assignment of lease if you are financing. Why?  This way, you can come back into the business and run it if the purchaser defaults, protecting the investment you sold. The landlord must allow you back if the lease is not in default and you have the assignment.

7. Vet the Purchaser

A seller must vet the purchaser. What is the purchaser’s background? Can this person run the business competently?  This is only important if you are financing the business. Otherwise, it is not an issue when the buyer is paying the purchase price in full upfront.

8. Avoid Trouble by Selling to a Reasonable Buyer

Still, no matter what is written in a contract, unreasonable buyers can make your life hell. Sell to someone who does not have obvious defects in their personalities. You will discover this when negotiating with them. Why is this important? You don’t need a lawsuit commenced by the buyer after you’ve sold the business.  Even if the lawsuit has no basis, it still costs money to defend. I would advise against representing in the contract any sales figure. Let the buyer vet the business and decide on the purchase based upon his accountant’s advice or his own instincts.

“There is much more advice that I have for these situations. If you are buying or selling, retain my 38 years of experience to ensure a smooth process.” – James Misiano

Contact James Misiano today at 631-396-0255 if you are planning to buy or sell a business.

Leandra’s Law – What You Need to Know  

What is Leandra’s Law?  Technically, it is a violation of Vehicle and Traffic Law Section 1192.2a(b) – a Class E Felony. The violation is operating a motor vehicle on a public highway while one’s ability to operate such vehicle is impaired by the influence of a drug (or alcohol) while a child of 15 years or younger is a passenger in the vehicle. In simpler terms, if you drive your car while impaired with a passenger under the age of 16, you will be charged with a felony.

These cases were originally charged as a misdemeanor – reckless endangerment to a child – but this law now supersedes the old misdemeanor statute, and you will be charged with a felony. The Suffolk County District Attorney Office’s policy is to request a sentence of 1-3 years incarceration.

Some people may think that they would never be in a position to be charged with such a crime, but they should think again. Many clients are on prescribed medication, and unbeknownst to them, they are driving legally impaired. They may drive their children to school and get stopped because of a minor traffic infraction and the police officer could suspect something more. The next thing you know they are in handcuffs on the way to the precinct.

Typical situations I have encountered are motorists taking prescribed Xanax for anxiety. Depending on the level of dosage, this can impair your ability to drive. Now, if you have a child in the car, it’s a felony.

After surgery, many motorists are driving following taking prescribed painkillers, an opioid or similar type of drug (doctors are now prescribing methadone to patients susceptible to opiate addiction). The motorist may think “I am fine. My doctor prescribed this legally.” But they don’t read labels or take into account that the drug ingested may still be in their bloodstream that afternoon when they are picking up the kids from school. You get the idea.

Many of Leandra’s Law cases are not what you might believe as typical such as a motorist having too many drinks at a bar and picking up a child on the way home (although, I’m sure this too occurs). In my practice, most of the cases seem to be an innocent unawareness of the drug ingested and the effect it may have on their ability to drive.

The bottom line is, be careful and be aware of what you are ingesting before you drive your motor vehicle. If you get caught, you know who to call.

Contact seasoned attorney James Misiano at 631-396-0255 if you encounter any of these situations or have a question about Leandra’s Law.