Michigan Business Law Attorneys Blog

Syncreon uses business planning for sale of Michigan company

2013-05-20T09:15:48Z

Making a business plan is important for an entrepreneur, especially when he or she is in the beginning phases of a new startup company. However, business planning is also important when selling or purchasing a business which has already been operating for some time. One closely-held company, Syncreon, which is headquartered in Michigan and specializes in logistics, is now doing this type of planning as a result of intentions to sell the company for potentially $1 billion.

The company has worked for major clients such as Dell Inc. and General Motors Co. in helping to ship their goods to their customers. The owners of Syncreon are two businessmen and a financial firm known as GenNx360 Capital Partners. They are working with JP Morgan Chase & Co. as well as Morgan Stanley to locate a potential buyer for Syncreon.

]]> According to sources involved in the private talks, private equity bidders are expected to be the most likely purchasers of the company. However, there is also interest from other logistics firms, such as Deutsche Post AG. Syncreon's sales have recently been on the rise and were last reported at $912 million in 2011, which is a significant increase from $689 million in 2010.

The eventual purchaser of the company will need to engage in effective business planning in order to ensure the Michigan company remains profitable after the transfer of ownership. A solid business plan will also ensure that the company adheres to any rules and regulations required by law. This will help to avoid fines for non-compliance as well as decrease chances of running into problems with potential lawsuits.

Source: Bloomberg, "Syncreon Logistics Business Said to Be for Sale for $1 Billion," Aaron Kirchfeld, David Welch and Joe Brennan, May 1, 2013

140 Proof business planning incorporates Michigan location

2013-05-14T05:21:59Z

In order to increase profit margins, many times a business needs to expand its operations. Sometimes, this means that a business will have to incorporate the launch of a new location into its business planning. This allows the business to either reach a new location-specific market or to increase its volume of production. One out-of-state social media advertising company has decided to expand its business by opening a new location in Michigan.

The head of the company, 140 Proof, graduated with a bachelor's degree from the University of Michigan. After moving out of state he became the Chief Technology Officer (CTO) of the company which has now been in operation for three years. The company was one of the first partners to help develop the world famous social media site Twitter.

]]> Twenty employees currently work for the company, which has offices in several major cities across the United States. The firm operated its first satellite office in a virtual environment for 18 months, while sharing space with other firms until it recently moved into its new office space in Michigan. However, in the new office space the firm does still share space with another start-up company. The company's CTO has expressed a high level of optimism in regards to how much the company will be able to grow its Michigan location.

Expanding into a new location in Michigan can be exciting for the new startup company. However, it is important for businesses to do careful business planning in order to make the expansion as efficient as possible. This will help avoid unforeseen and unnecessary costs, while also ensuring compliance with applicable laws and regulations.

Source: semichiganstartup.com, "140 Proof looks to grow Elevator Building office," Jon Zemke, May 3, 2013

University of Michigan creates hub for new business startups

2013-05-06T09:18:16Z

When an entrepreneur has a good idea, he or she must somehow find a way to bring the idea to the marketplace in order to make a profit. Many times this will require presenting the idea to potential investors as well as directly selling to the public. The University of Michigan understands this need and has taken action to assist young entrepreneurs to showcase their ideas for new business startups.

This is why the school created a new student marketplace which was an idea presented by MPowered, a student organization that focuses on entrepreneurship. The group has taken over an unused office space and transformed it into a hub for startup companies to showcase their products and services. There are a range of types of startup companies being represented at the marketplace, which is called VEX Venture Exposition.

]]> The new hub is meant to be a space for startups in their later stages that are prepared to present their products or services to the public. Originally, VEX was designed for student entrepreneurs to open store fronts. However, the organizers realized that this might be too much of a commitment for students who are also tackling a full schedule of classes. The organizers then decided to make VEX into a workplace during most of the week, except for on Sundays when it will be a day for startups to sell their products and services.

Opportunities such as VEX at the University of Michigan can be valuable resources for new business startups looking to launch their endeavors. On the other hand, what is also important is a well-crafted business plan, which will provide a road map for entrepreneurs. However, this business plan must ensure that the startup business adheres to any applicable laws. Each type of business will have different rules and regulations, therefore it will be important to be well-researched in the law.

Source: annarbor.com, "Student startup marketplace opens in bottom floor of Michigan Union," Ben Freed, April 21, 2013

Business planning commission to review Wal-Mart in Michigan

2013-04-29T06:30:31Z

Recently, Wal-Mart has become one of the largest and fastest growing companies in the U.S. with locations all over the country. The corporation now has its eye on opening its latest location in a town in Michigan. The plans for the new location have been submitted and were set to be examined by a local business planning commission in the middle of April.

The corporation is requesting that the commission approve their plans for building on the 30.35 acre plot of land. The plans call for a large shopping complex that will span 126,161 square feet. Wal-Mart had previously submitted a plan but the town officials requested that the corporation include a buffer zone between the parking lot and two residential properties located just north of the store.

]]> The town has also requested that the corporation include a sidewalk for public use along the property. The newly submitted plans reflect all of the changes which the town officials had requested of the corporation. The plan will include an automotive center as well as the usual retail departments, such as clothing, groceries, hardware and more.

Although there was a short delay for Wal-Mart, the company's new Michigan location seems to be going rather smoothly. More than likely the corporation has implemented effective and careful business planning, thus ensuring that the location meets all local rules and regulations. This will help to avoid future litigation for any safety or other types of violations. It has also ensured that the location will fulfill all of the requests made by the local planning commission.

Source: mlive.com, "Whitehall Township Wal-Mart plans to get planning commission review April 24," Dave Alexander, April 19, 2013

Michigan city contributes to condo development project

2013-04-22T20:18:38Z

There is certain infrastructure which is required to make a condo development a viable endeavor as well as a profitable investment. Since individuals and families will be living in any proposed residential development or complex, they will need proper roads, lighting and other types of infrastructure needed for everyday living. One city in Michigan recognizes this and has promised to pay for this essential infrastructure in order to help a multimillion dollar condo development project move forward.

The city says it is planning on taking out a $250,000 loan to help with the essential infrastructure to make the residential development a viable enterprise. The planned condo development will be located right next to a local golf club. Thirty-four condominium units are planned to be included in the proposed project, which will be implemented by American Village Builders. The location is currently a foreclosed, partially developed project abandoned by a previous developer.

]]> The city council had originally agreed to a $125,000 contribution to develop the necessary infrastructure. However, the council wanted to ensure the developer would choose this particular site, since the developer was also considering other sites to develop. This is why the council decided to double its promised contribution. The development is expected to generate a minimum of $170,000 per year in additional tax revenue.

Along with the proper infrastructure to attract residents wishing to live in the condo development in Michigan, the developers must also educate themselves on the local legal regulations for residential properties. This will help to avoid any fines which may be incurred as a result of violating any local laws. It may also prevent any future civil lawsuits which could be caused by potential safety violations.

Source: mlive.com, "Vicksburg agrees to increase funding to help develop unfinished condos near Angels Crossing Golf Club," Tom Haroldson, April 5, 2013

Michigan couple begins franchising agreement for moving company

2013-04-19T14:13:38Z

Entrepreneurs consist of more than just people who come up with completely original business ideas of their own. Sometimes they are people with business skills which they choose to apply to an already existing business model. This type of entrepreneurship is known as franchising, which entails obtaining the appropriate permission to use another entity's business model in order to open one's own business to service a certain territory or location. One couple in Michigan decided to go this route when opening their own moving company.

The couple was looking for a business which they could open up and eventually leave behind for their children to operate. They heard about a moving coming called College Hunks through some relatives who had invested in the company a few years previously. The company's business model entails recruiting personnel from college campuses in order to help move, load and haul furniture and other household items for paying customers.

]]> After falling in love with the concept and the marketing angle of the company, the couple decided to open their own franchise in Michigan. The pair believes that the business model fits their values, vision and what they had in mind when they were envisioning opening a new family business. They were also attracted to the business model because they believed their locale held an unfulfilled demand for this type of service, therefore providing a potential for significant profits.

Along with implementing the business model and utilizing the preexisting marketing angle, the couple in Michigan must also make sure the legal agreement with the franchisor is properly laid out. This will ensure that both parties receive what they agree to in their franchising agreement. Carefully drafting all of the proper legal contracts and other documents is essential to avoid any misunderstandings and potential future lawsuits.

Source: mlive.com, "'College Hunks' moving and junk removal franchise opens in Flint," Jeremy Allen, March 26, 2013

University of Michigan business planning includes new discovery

2013-04-12T15:22:27Z

Scientists are passionate about their work and are tireless in their efforts in making new discoveries and inventions that could potentially benefit all of society. When a scientist makes an important discovery, he or she will probably want to make sure that all of the hard work does not go to waste. This is the case with an important new discovery made at the University of Michigan, which demonstrates that light can reverse oxidation of copper. The university is now looking to move forward with business planning in order to monetize this discovery.

The potential business opportunity came about when a chemical engineering associate professor discovered that shining a white light that is five times more intense than the sun on copper keeps the copper in a metallic state, while reversing oxidation on nanoparticles. The university researchers believe that this could help create an environmentally friendly process for producing propylene oxide. This chemical is required to make a variety of plastic, toiletries, antifreeze, paints and a variety of other household products.

]]> What makes this newly discovered potential process important is that the chemical is being created by means of a direct reaction, which eliminates the waste resulting from the current methods used to produce the industrial chemical. Currently, producers of propylene oxide make nearly 2.5 million metric tons of the chemical in order to meet demand in the United States. This is approximately $4.9 billion worth of the industrial chemical.

In order to fully capitalize on this discovery the University of Michigan will have to conduct careful business planning to make sure all bases are covered. This will require an understanding of the rules and regulations connected with creating an industrial chemical which will eventually be utilized to create products that will reach the public marketplace. Conforming to these regulations will help to avoid future potential lawsuits.

Source: esciencenews.com, "Light may recast copper as chemical industry 'holy grail'," March 31, 2013

Banning arbitration clauses may increase business litigation

2013-04-05T22:26:48Z

Generally businesses and entrepreneurs want to avoid having to go to court over any type of dispute. Business litigation can be expensive and time-consuming, which can be detrimental to a company's profit margins. The car industry in Michigan and elsewhere have been aware of this, which is why automotive dealerships have been including binding commercial arbitration agreements in their loan contracts.

However, the Consumer Financial Protection Bureau is now considering banning automotive dealerships in the United States from using these types of dispute-resolution provisions in their loan contracts. The bureau has been conducting a public inquiry to determine what effect these arbitration provisions have on consumers and financial services firms. The Dodd-Frank Act made the inquiry mandatory, while also granting the bureau power to enact regulations for consumer protection.

]]> The automotive industry's use of arbitration clauses has increased significantly within the last 10 to 15 years. Many car dealerships claim that disallowing them to use arbitration provisions in their loan contracts will potentially increase costs and puts them at risk for class-action lawsuits. However, consumer advocates argue that ending these dispute-resolution clauses will help protect consumers who are usually at a disadvantage when dealing with car dealerships in the court of law.

If the bureau disallows use of arbitration clauses, it will likely cause an increase in business litigation for car dealers in Michigan and elsewhere. This will require the car dealerships to take this into consideration when they do their business planning. It may also require an increased understanding of all applicable laws affecting the car industry in order to avoid lawsuits as well as prepare to respond to them in an effective manner.

Source: autonews.com, "U.S. scrutiny of dispute provisions in loan contracts threatens dealerships," Amy Wilson, March 20, 2013

Protecting Your Key Business Assets Takes More than Just a Non-Compete

2013-04-05T18:06:55Z

It's not only what your business knows, but also who at your business knows it. Industry leading companies echo that key employees, who typically possess institutional knowledge and trade secrets, are their most valuable assets. Particularly for sales focused organizations, the risk of disloyal key employees taking know-how and relationships can be catastrophic. Protecting your key business assets is vital.

There are ways to protect your organization against risks associated with disloyal employees and raiding competitors. Effective planning and protection mechanisms can deter and effectively prevent disloyal employees from taking your hard earned institutional knowledge and property to work for a more-than-eager competitor, and may effectively deter key employees from leaving in the first place. Lack of effective planning, on the other hand, paves the way for "mutiny" and cannibalizing your business of other employees, information and customers.

How Good is Your Non-Compete?

Employees are often required to sign restrictive covenant, or "non-competes," that may contain prohibitions against competing against the employer, taking the employer's confidential information, and/or soliciting the employer's other employees and customers. Many employers collect boiler-plate non-competes from every employee, without giving further thought to when they are enforceable and what business practices may maximize the enforceability of non-competes. Employers generally expect such agreements to, without much more, protect the employer's ideas, customers and other employees. Although Michigan has a statute governing non-competes, MCL 455.774a, enforcing non-competes isn't as easy as one would expect.

But, That's Not Fair

"Reasonable" agreements that protect an employer's "legitimate business interests" are enforceable in Michigan and in many other states, with some variation. The definition of reasonable varies, however, as does the interpretation of legitimate business interests. To further complicate things, in determining whether to enforce a restrictive covenant, courts apply principles of equity - asking "is it fair...?" As any child can tell you, arguing and proving what is "fair" is easier said than done. While advanced planning and appropriate business practices can help establish "reasonable," "legitimate" and "fair," few employers take the advanced steps necessary to maximize the protections theoretically offered. Without appropriate advanced planning, many employers risk being taught a lesson in non-competes by a skilled litigator after-the-fact.

Don't Wing it, Get Professional Help

As an experienced litigator in the field, I make my living both enforcing and circumventing non-competes and other restrictive covenants. I also help clients assess non-competes and employer practices before it becomes too-late. While I have successfully won such disputes at trial, and could help you on either side of the divide, I counsel my clients that an ounce of prevention is worth a pound of cure.

How confident are you that your key business assets are protected?

Alex Stotland is a business litigation attorney licensed in both Michigan and New York, who is a partner at Hertz Schram, with a significant practice in counseling and representing clients in disputes concerning restrictive covenants, trade secrets, raiding, unfair competition, licensing, and other business and employment issues. Alex can be reached at astotland@hertzschram.com or (248)335-5000.

Tesoro incorporates algae-derived oil into its business planning

2013-03-28T18:42:01Z

There has recently been plenty of concern regarding the negative effects that drilling for oil has on the environment. Much of this has stemmed from the various large spills at oil drilling locations which have resulted in the pollution of the environment in Michigan and elsewhere. Some oil companies are looking for new ways to produce oil without having to drill. One company, Tesoro Corp., has decided to address this concern by adding algae-derived crude oil into its business planning.

Tesoro, which is the largest independent oil refiner on the West Coast, has recently decided to purchase algae-derived crude oil from Sapphire Energy Inc. The amount Tesoro has decided to buy from Sapphire has yet to be released to the public. However, Sapphire has made public statements which suggest that this is the beginning of a longer-term business relationship between the two companies.

]]> The product being purchased was produced at Sapphire's demonstration plant which was partially funded by a $50 million grant via the U.S. Energy Department. The Department of Agriculture also provided a $54.4 million loan guarantee. By 2014, Sapphire plans to begin producing as much as 100 barrels per day.

Arguably, Tesoro may be on the cutting edge of energy technology by implementing this alternative source of crude oil into its business planning. However, in order to fully maximize profit potential while also avoiding possible losses will require a well-crafted business plan. Additionally, an effective business plan will ensure that all legal regulations in Michigan and elsewhere are being followed in order to avoid future fines or law suits.

Source: Bloomberg Businessweek, "Tesoro Is First Customer for Sapphire's Algae-Derived Crude Oil," Andrew Herndon, March 20, 2013

Michigan lawmaker proposes tax law for new business entities

2013-03-21T21:29:57Z

Keeping up to date on the latest changes in business laws and regulations is important for any entrepreneur looking to form a new business. Some of these changes can affect how certain types of business entities are taxed. One lawmaker from Michigan is currently promoting a change in the law that will alter the tax liabilities of some business partnerships. Anybody who is looking to start a new business will want to pay attention to the details of the proposed changes in tax law.

Under one option proposed by the congressman, partnerships such as private equity firms and hedge funds will be more limited in their ability to allocate tax benefits and income to their members. The proposal would get rid of the separate rules pertaining to partnerships and those managing closely held S corporations. One unified set of rules will be created which would merge the features of both current sets of rules.

]]> The lawmaker also offered a second option that would revise how small businesses are taxed. The second option proposes a more incremental approach to changing tax laws for partnerships and S corporations. It would also extend expensing rules and enable businesses to use cash accounting. This more incremental approach would also streamline deductions for new businesses.

If any of these two options proposed by the lawmaker from Michigan becomes enacted into law, it may affect the tax planning for those looking to start a new business. It may even prompt an entrepreneur to change the type of business entity he or she forms. However, whatever type of business entity an entrepreneur chooses, he or she will have to make sure to follow the proper legal procedure. Each business entity requires specific types of planning and documentation, and the right advice may be the best recipe for success.

Source: Bloomberg Businessweek, "Camp Offers Option That Would Revamp Partnership Tax Law," Richard Rubin, March 12, 2013

Michigan community attracts new business with revitalization

2013-03-12T20:42:45Z

Business thrives when it is supported by a strong surrounding infrastructure. Sometimes in order to obtain this necessary infrastructure a community will need the help of state and local government funds to improve the local area. Recently one community in Michigan was designated as a Michigan Main Street community, which means it now has access to approximately $250,000 in technical assistance to develop the community in order to make it more attractive to an entrepreneur to open a new business.

In total there are 19 areas in the state that have been designated as Michigan Main Street communities. The Main Street program was created to revitalize select downtown districts in order to preserve historic buildings and stimulate local business. By making the select districts more attractive for people to live in, it will in turn bring more customers who will buy products from local businesses as well as employ their services.

]]> The program enables this specific Michigan district to access consultation and training. Some of the services offered include design, event production training, commercial real estate development training, as well as a variety of other important training. The residents of the community are excited about the revitalization efforts and the potential economic benefit that may come about for local businesses.

Revitalization programs such as this one in Michigan may seem attractive to an entrepreneur looking to open a new business. However, one must make sure that the business conforms to all legal requirements. This means the business person will need to do significant research regarding local rules and regulations pertaining to the specific type of business.

Source: lansingcitypulse.com, "Downtown Lansing: A Michigan Main Street community," Sam Inglot, March 8, 2013

Two franchising business people re-open fast food restaurants

2013-03-05T16:13:13Z

Most people enjoy modern-day conveniences. This can be especially true for busy Americans who are hungry but have little time to cook for themselves. Demand for convenient eating options has made the fast food franchising business a potentially profitable industry to enter. One entrepreneur from Michigan recognized this and decided to team up with another entrepreneur in order to re-open a fast food restaurant chain which had shut recently shut down in another state.

The new owners of the Checkers restaurant locations took over the former owner's franchise territory. The former owner had to close the restaurant locations amidst a bankruptcy process. The new owners plan to open as many as eight more stores within the county. The previous owner ended up filing for Chapter 11 bankruptcy in 2009.

]]> After doing a careful study of the location's surrounding demographics and researching the traffic patterns, they decided to move forward with their business plans. The two entrepreneurs also recognized what customers liked about the restaurant, which they believe was fast service and convenience. Most of the customers visiting Checkers ordered at the drive-through window. Many of the customers missed having the restaurant because of the convenience and the good food, according to one of the new owners.

Along with market research, the two franchising entrepreneurs needed to also make sure all of their legal requirements were being met. Restaurants in Michigan and elsewhere in the nation are regulated by their own local laws, which require certain types of permits to be obtained. Also, there are certain safety standards which are necessary when serving food products in a restaurant.

Source: Florida Today, "Fast-food franchise Checkers gets new life in Brevard," Patrick Peterson, Feb. 27, 2013

Merck invests $600 million in new company founded in Michigan

2013-02-27T21:04:49Z

Advancements in medical research are vital to helping medical professionals save lives and improve the health of the population. Also, medical research can lead to profits for those who are in the position to capitalize from it. This may have been the reason behind Merck deciding to invest $600 million into a new company, which focuses on biotechnology and was started at the University of Michigan.

Initially Merck offered the company, Lycera, $12 million of investment capital as well as an additional $295 million which would be contingent upon the progress of Lycera's research. The research company's drug is designed to combat diseases of the autoimmune system. The drug does this by zeroing in on small molecules that normally attack T-helper cells. Lycera believes that this is a unique method for fighting diseases, such as psoriasis, inflammatory bowel disease, and rheumatoid arthritis.

]]> The research startup has already obtained $36 million in 2009 from its initial round of raising investment funding. Lycera is planning to attempt to move forward with clinical trials within a year and a half or sooner. The research company's basis stems from research performed at the University of Michigan. Merck recently announced it is increasing its investment package to $600 million to be presented to Lycera.

The Michigan research company's success in obtaining investment funding stems from the profitability of the drug that it is currently developing. However, in order for any business to show potential for profit the new company will need a solid business plan in order present to possible investors. In industries that are heavily regulated, such as the pharmaceutical industry, the company's owners and executives will need to be knowledgeable of applicable laws and regulations.

Source: wealthdaily.com, "Promising Biotech Startup," Swagato Chakravorty, Feb. 15, 2013

New business in Michigan aims to help transfer old phone data

2013-02-20T17:04:55Z

Many people are keen on keeping up to date with the latest in cell phone technology. For these people, it is important to purchase the newest cell phone model available on the market. Although this may provide them with the convenience afforded by the latest technological advancements, some of their important data, such as text messages and emails, may be trapped in an older format. A new business based in Michigan offers consumers a remedy to this problem.

The new startup company, known as stkr.it, enables consumers to easily move text messages, emails and other data from their old cell phone to their new one. The president of the company realized the need for this service when he noticed that younger people were saving their old cell phones because they had old text message conversations that they did not want to lose. The company aims to capitalize on the sentimental value attached to data inside of cell phones

]]> The president and his father were once executives in another company known as ReCellular. This company was the largest cell phone recycler that worked to find ways for consumers to recycle their old cell phones. The president of stkr.it was able to convince his father to become one of stkr.it's first investors. The company is now a little more than a year old and currently employs five people.

It is important for companies such as this new business in Michigan to have a solid business plan. This is especially important in the beginning phases of the business, particularly for attracting startup funding. The business owner should also ensure that the business plan meets all required legal rules and regulations applicable to the particular industry.

Source: Southeast Michigan Startup, "Former ReCellular execs launch new start-up, stkr.it," Feb. 1, 2013