Corporate & Business Law: Frequently Asked Questions

Q1. What types of businesses does Sayer, Regan & Thayer represent?

We work with businesses in manufacturing, hospitality, yachting and marine industries, real estate development, construction, banking, and the arts. We represent traditional brick-and-mortar businesses, internet businesses, year-round operations, and seasonal businesses.

Our client base ranges from emerging startups to long-standing family businesses. We handle legal work for expanding companies that need help scaling operations and established businesses facing new challenges or opportunities.

Q2. How do you help businesses succeed?

We get to know our business clients and their long-term goals. That means we’re not just handling one-off transactions. We’re building relationships where clients come back to us when they encounter a challenge or see an opportunity.

Our approach is practical. We want to understand what you’re trying to accomplish and help you get there without creating unnecessary complexity or expense. When our business clients succeed, we succeed.

Q3. What’s involved in business startup and formation?

Starting a business means making decisions about entity structure, ownership, financing, and regulatory compliance. We help new business owners work through these decisions and get the company set up properly from the start.

That includes choosing the right entity type, filing formation documents, drafting operating agreements or bylaws, setting up banking and accounting structures, and making sure you’re compliant with state and local requirements.

Getting the foundation right at formation generally helps avoid problems later. Many issues we see with established businesses trace back to shortcuts taken at startup.

Q4. How do I choose between an LLC, corporation, partnership, or sole proprietorship?

Each structure has different tax treatment, liability protection, ownership flexibility, and administrative requirements.

• Sole proprietorship: the simplest structure, where you and the business are the same legal entity. Easy to set up, but you generally have unlimited personal liability for business debts and obligations.
• Partnership: two or more owners sharing profits and management. General partnerships generally expose all partners to unlimited liability, while limited partnerships let some partners limit their liability and involvement.
• LLC (Limited Liability Company): generally, provides liability protection similar to a corporation with more tax flexibility. Members are typically not personally liable for company debts, and an LLC can usually be taxed as a sole proprietorship, partnership, or corporation, with a lower administrative burden than a corporation.
• Corporation: a separate legal entity owned by shareholders that generally provides liability protection, along with a required board structure and corporate formalities. It can be taxed as a C corporation, which involves double taxation on profits, or an S corporation, which allows pass-through taxation but comes with restrictions on ownership.

The right choice depends on your liability concerns, tax situation, number of owners, need for outside investment, and long-term plans. We walk clients through the analysis and help them make an informed decision.

Q5. What is business succession planning and when should I start?

Business succession planning is figuring out what happens to your business when you retire, become disabled, or die. It covers ownership transfer, management transition, valuation, tax planning, and funding mechanisms.

Starting well before you think you’ll need it generally preserves the most options. Waiting until you’re ready to retire or facing a health crisis can limit your choices and create unnecessary tax exposure or family conflict.

A solid succession plan generally addresses who will own the business, who will run it (which may be different people), how ownership will be valued and transferred, how the transfer will be funded, and what happens if an owner dies or becomes disabled unexpectedly.

For family businesses, succession planning often involves estate planning, gift tax strategies, and careful thought about which family members are interested and capable of running the business versus those who just want financial returns. We work with business owners, their accountants, and estate planning attorneys to build succession plans that protect the business and the family. See our Succession Planning FAQ for a fuller treatment of this topic.

Q6. When do I need a shareholder agreement?

If you have more than one owner in your corporation, you generally need a shareholder agreement. Even if you’re starting the business with a close friend or family member and can’t imagine disagreeing, it’s worth having one.

Shareholder agreements typically cover what happens when shareholders disagree about major decisions, when someone wants to sell their shares, when someone dies or gets divorced, how new shares are issued, and what happens if the company needs more capital.

Common provisions include buy-sell arrangements, valuation methods, rights of first refusal, drag-along and tag-along rights, dispute resolution mechanisms, and restrictions on transfers.

These agreements are generally much easier to negotiate when everyone is on good terms and optimistic about the business. Trying to work out these issues after a dispute has started is often expensive and unsuccessful.

Q7. What business planning and strategy work do you do?

We help businesses think through growth strategies, market entry, operational changes, and risk management. That can involve structuring joint ventures, analyzing acquisition opportunities, advising on expansion financing, reviewing supplier and customer contracts, and planning for regulatory changes.

A lot of this work involves being a sounding board for business owners as they work through decisions. We’ve seen how different approaches play out across many businesses and industries, so we can help clients anticipate issues and think through alternatives.

Q8. How does capital financing work for small and mid-sized businesses?

Capital financing means raising money to start, operate, or grow your business. It can come from bank loans, private investors, equipment financing, lines of credit, or selling equity in the business.

Bank loans generally require collateral, personal guarantees, and demonstrated ability to repay. They don’t dilute ownership but create debt obligations. Private placements involve selling equity or debt securities to investors, which can bring in capital without bank underwriting requirements, but generally dilutes ownership and triggers securities law compliance.

We help businesses evaluate financing options, negotiate terms with lenders and investors, prepare offering documents for private placements, and work to ensure compliance with securities regulations.

Q9. What are private placements and what securities laws apply?

A private placement is when a company sells securities, such as stock, membership interests, or notes, directly to investors without a public offering. This is generally how small and mid-sized businesses raise money from outside investors.

Private placements must comply with federal securities laws, including SEC Regulation D, and applicable state securities laws, often called blue sky laws. These laws require specific disclosures, restrict who can invest, and limit how you can advertise the offering. Common exemptions include Rule 506(b), which allows an unlimited raise from accredited investors without general solicitation, and Rule 506(c), which allows an unlimited raise from verified accredited investors with general solicitation.

Blue sky laws vary by state. Even if you’re exempt from federal registration, you may need to file notices or qualify the offering in each state where you have investors.

Getting this wrong can create rescission rights for investors, SEC or state enforcement actions, and potential personal liability for company officers, so we handle this compliance work directly.

Q10. What should be in a shareholder agreement versus an operating agreement?

Operating agreements are for LLCs. They govern how the company operates, how members share profits and losses, management structure, voting rights, capital contributions, and what happens when members leave or new members join.

Shareholder agreements are for corporations. They govern relationships among shareholders, transfer restrictions, buy-sell arrangements, voting agreements, and dispute resolution, and generally exist alongside the corporate bylaws, which handle more routine operational matters.

Both documents should generally address what happens when owners disagree, how major decisions get made, how ownership can be transferred, how the business is valued, and what happens when an owner dies, becomes disabled, or wants to exit. We draft both types of agreements to match the specific ownership structure and goals of each business.

Q11. How do mergers and acquisitions work for small and mid-sized businesses?

Mergers and acquisitions generally involve one company buying another or two companies combining. For small and mid-sized businesses, this often happens when an owner wants to retire, when competitors consolidate, or when a larger company acquires a smaller one.

The process typically includes business valuation, due diligence, deal structure (an asset purchase versus a stock purchase), negotiation of purchase price and terms, and post-closing transition. In an asset purchase, the buyer generally purchases specific assets and assumes specific liabilities, while the seller keeps the corporate entity and any liabilities not expressly assumed. In a stock purchase, the buyer generally acquires all stock and the entire company, including all assets and liabilities, known and unknown.

M&A transactions require careful attention to employment issues, customer and vendor contracts, real estate leases, intellectual property, environmental compliance, and tax consequences. We represent both buyers and sellers, helping sellers structure the deal to work toward maximizing after-tax proceeds and limiting post-closing liability, and helping buyers conduct due diligence and negotiate protections against undisclosed liabilities.

Q12. What contract work do you handle for businesses?

We draft, review, and negotiate contracts for business operations, including customer agreements, vendor contracts, service agreements, distribution agreements, licensing agreements, employment contracts, non-compete and confidentiality agreements, and commercial leases.

A good contract generally states clearly what each party is responsible for, when performance is due, how payment works, what happens if someone doesn’t perform, how disputes are resolved, and when the contract ends.

Many business disputes trace back to unclear or incomplete contracts. Having an attorney review significant contracts before you sign them is typically far less costly than litigating a dispute later. We also help businesses develop template contracts for recurring transactions, which can save legal costs while maintaining proper protection.

Q13. What intellectual property protection do businesses need?

Most businesses have intellectual property worth protecting, even if they don’t realize it.

• Trademarks protect brand names, logos, and slogans that identify your business or products. Federal registration with the USPTO gives you nationwide protection and the right to use the ® symbol, while state registration provides more limited geographic protection.
• Copyrights protect original creative works like written content, software code, graphics, and marketing materials. Copyright exists automatically when you create original work, but federal registration is generally required to sue for infringement and provides additional remedies.
• Trade secrets are confidential business information that gives you a competitive advantage, including customer lists, pricing strategies, manufacturing processes, and proprietary methods. Protection generally requires actual efforts to maintain secrecy.
• Patents protect inventions. Patent prosecution is specialized work we refer to patent attorneys, but we handle patent licensing agreements and IP issues in business transactions.

We help businesses identify what IP they have, register trademarks and copyrights where appropriate, and draft confidentiality and IP assignment agreements for employees and contractors, and can assist enforcing IP rights when necessary.

Q14. How do employment law issues come up in business law?

Employment law intersects business law in hiring, compensation, equity incentives, non-competes, ownership transitions, and business sales.

When businesses bring on key employees, they often use employment agreements that cover compensation, benefits, duties, termination terms, non-compete provisions, confidentiality obligations, and IP assignment.

For startups and growing companies, stock options and equity incentives are common ways to attract and retain talent, though these can create securities law and tax issues that require careful structuring. Business sales also tend to trigger employment issues around which employees transfer to the buyer, what happens to employee benefits, and whether key employees will stay post-closing.

We work with businesses on employment agreements, equity incentive plans, non-compete and confidentiality agreements, and employment issues in M&A transactions.

Q15. What immigration issues affect businesses?

Businesses hiring foreign nationals generally need to navigate visa requirements. Common business immigration issues include H-1B visas for specialty occupation workers, L-1 visas for intracompany transfers, E-2 visas for investors, and employment-based green cards.

The process typically involves employer sponsorship, labor certifications in some cases, government filings, and compliance with wage and working condition requirements. Startups founded by foreign nationals can face additional complexity around visa status, ownership restrictions, and maintaining legal status while building the business.

We work with businesses on employment-based immigration and coordinate with immigration specialists when a more detailed visa strategy is needed. See our Immigration Law FAQ for a fuller treatment of this topic.

Q16. What industries does the firm have particular experience with?

Our attorneys have worked extensively with businesses in yachting and marine industries, hospitality and restaurants, real estate development and construction, manufacturing, banking and financial services, and arts organizations.

That industry experience generally means we understand the regulatory environment, common business models, and typical challenges in those sectors, which can help us anticipate issues before they become problems.

Q17. Does business law work overlap with your other practice areas?

Yes, and that’s valuable for business clients. Business succession planning overlaps with estate planning. Real estate development involves both business law and real estate law. Businesses in the marine industry need both business counsel and maritime law expertise. Employment disputes can lead to litigation. Business sales often involve real estate transactions.

Because Sayer, Regan & Thayer handles all of these practice areas, business clients can generally get comprehensive advice without coordinating between multiple firms.

This article is intended for informational purposes only and does not constitute legal advice. Business and corporate law involves fact-specific analysis and varies by jurisdiction. To talk with one of our business attorneys, call our Newport office at 401-849-3040 or our Wakefield office at 401-789-1616.