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Tampa Business & Commercial Law Blog

Preparing to take a Florida company public

Taking a company public can be a signal that the company is ready to be a force in its industry. However, there are some pros and cons that may need to be considered before deciding whether an IPO is right for a given organization. While going public can be a great way to raise money, it also means a loss of control for the company's owners as shareholders have a larger say in how the company is run.

However, going public can be a way for early investors to enjoy more liquidity in their investment. A public company may also be able to use stock options as a way to entice talent to stay with or join the business. Companies that need more money in the future can raise capital through additional stock offerings. Finally, being a public company is considered prestigious.

The difference between an acquisition and a takeover

In the Florida business world, acquisitions and takeovers take place on a regular basis. Many people regard the two terms as interchangeable; however, there are some differences between them. In the case of an acquisition, also known as a friendly takeover, the acquired company has given permission for the takeover. In the case of a takeover, the company may not have given consent for the action. If one company takes over another without the consent of the company being taken over, the action is considered a hostile takeover.

When a company wishes to take over another, it may begin by initiating either a proxy fight or a tender offer. In a proxy fight, the acquiring company will seek to control the target organization's board of directors by obtaining the shareholder's voting rights. To take over a company by way of tender offer, a company will seek to purchase a majority of the company's shares. To accomplish this, the acquiring company might offer to pay more than the market value.

5 tips for Florida owners who plan on selling their company

Across the nation, many business owners are engaging in the sale of their ventures. Such transactions can be complicated, and can be a challenge to make the sale go smoothly. However, there are five tips that may help business owners to pursue a positive outcome as they plan the sale.

First, a successful business sale requires thorough preparation that can take more than a year. Compiling the financial records of the company is one of the elements involved in this step. Second, company owners should set the correct value for their business. A price that is set too low may cause potential buyers to think something is wrong with the property while an inflated price can also be detrimental. An objective third party can help with the appraisal.

5 different types of company mergers

When one or more businesses combine their assets in Florida, this combination is referred to as a company merger. A company merger may be described as one of five different common merger types. Determining what kind of merger is taking place will depend on the relationship between the companies that are merging and the purpose for the merger.

Two of the most common kinds of mergers are conglomerate mergers and horizontal mergers. A conglomerate merger is a merger between two different companies that offer different goods or services and compete in different markets. A horizontal merger, on the other hand, is a merger between two companies that offer the same good or service in the same market. Another kind of merger, called a market extension merger, takes place when two companies that previously sold the same good or service in different markets decide to merge.

Defending against a hostile takeover

Business owners in Florida may benefit from learning more about some of the issues related to hostile acquisitions. Companies that are targeted typically employ a variety of defenses in attempts to ward off potential bidders. The hostile acquisition is described as an organization attempting to take over another by means other than a direct purchase. Regulatory agencies and the target company's shareholders may attempt to prevent the takeover by entangling the bidder in litigation.

The typical goal of a target's defense strategies is to make the acquisition less appealing to the takeover company, reduce the targeted company's value or to provide the targeted company with more time to prevent the takeover. Opposing parties typically cite securities, antitrust or financial violations. Greenmail is one common strategy, described as purchasing shares from the hostile bidder for a price exceeding market value.

What is the role of the trustee in a Chapter 11 bankruptcy?

In a Chapter 11 reorganization case filed by a Florida company, the bankruptcy trustee plays a prominent role. He or she is responsible for monitoring the debtor's operation of the business and to make certain the debtor submits all required quarterly reports and fees regarding the business as required to the bankruptcy court.

The U.S. trustee conducts a section 341 meeting, also known as a creditors's meeting. At the creditors's meeting, both the creditors and the trustee can question the debtor in possession under oath about the debtor's conduct, acts, property and how the case is being administered. The debtor in possession will also be required to pay quarterly fees ranging from $300 to $30,000 to the trustee depending on the monthly receipts of the business during the period.

What is the role of a creditors' committee in Chapter 11?

A Florida business going through Chapter 11 bankruptcy has the opportunity to reorganize company operations in order to improve its chances of surviving tough economic times. However, creditors have an interest in the activities of a business owner during the reorganization process. Creditors who may be paid less than what is owed are able to participate in a ballot process to vote on a reorganization plan. A creditors' committee is typically composed of the seven creditors with the largest unsecured claims pending against the company filing for Chapter 11. The bankruptcy trustee appoints the committee.

The responsibilities of the creditors' committee relate to oversight of business operations and administration of the business bankruptcy. The committee may consult with the debtor about the case's administration. Additionally, the committee may evaluate conduct issues and business operations to ensure that the debtor in possession is acting responsibly. The committee also helps during the development of the repayment plan for the debtor. If necessary, a creditors' committee might hire a lawyer to assist with these responsibilities. The goal in positioning this group is to promote appropriate actions on the part of the debtor.

Understanding Chapter 11 bankruptcy

Homeowners and business owners may benefit from understanding more about the description of Chapter 11 bankruptcy provided by the U.S. Courts. The courts refer to this type of bankruptcy as reorganization. Debtors are permitted to propose a plan of reorganization for an opportunity to retain the assets and repay creditors over a period. Although reorganization is an instrumental part of the process, there are also heavy stipulations that the debtor in possession is required to abide by.

The stipulations are designed to provide adequate protection for creditors. Debtors in possession are permitted to lease, sell or use property of the estate within the scope of conducting normal business. Debtors are required to receive permission from court before using the assets in activities that are beyond the scope of conducting ordinary business. In addition, debtors in possession are prohibited from freely using items described by the U.S. Courts as "cash collateral."

Providing services during mergers and acquisitions

Florida businesses that are financially distressed or currently considering mergers or acquisitions may benefit from consulting with our firm. Mergers and acquisitions are often cumbersome and may pose unnecessary risk to all parties involved when they are managed improperly. Our lawyers can help ensure that safeguarding the business's interests remains a top priority in all transactions. Legal counsel may work to develop solutions and strategies that maximize the benefits we might provide for your business, and we have experience assisting businesses in all phases of mergers and acquisitions.

Our firm has represented buyers and sellers participating in many different types of transactions. Our proficiency in insolvency, corporate bankruptcy, business law and various business operations enables us to provide legal assistance in a varying array of complex situations. We cater our legal advice to coincide with your organizational priorities or limitations. Aside from bankruptcy, we can also provide guidance to businesses in completing initiatives for corporate restructuring.

How does Chapter 11 work?

A business dealing with financial difficulties that may affect the ability to pay creditors and continue operation might seek relief through Chapter 11 bankruptcy. This may provide the opportunity to regain a stable financial footing. Chapter 11 is most commonly used for the reorganization of a business although certain individuals qualify as well. In the case of a business, this form of bankruptcy may be used by corporations, partnerships and limited liability companies.

As in other types of bankruptcy, Chapter 11 is initiated with a petition that is filed with the bankruptcy court. This type of debt reorganization can begin voluntarily, but it can also be initiated under certain conditions by creditors. At the same time the petition is filed, a debtor is expected to provide schedules of income and expenditures, schedules of liabilities and assets, and information about contracts and leases that are still active. As well, a statement must be provided that details current financial affairs for the organization. Filing fees and other administrative costs are assessed and must be paid at the time the bankruptcy petition is filed.

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