Business Appreciation: Adding Gratitude to Company Culture in 2020

Business Appreciation: Adding Gratitude to Company Culture in 2020

January 21, 2020

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Next to physical survival, the greatest need of a human being is psychological survival—to be understood, to be validated, to be appreciated. William Covey, 7 Habits of Highly Effective People ____________________________________ The deepest principle of human nature is a craving to be appreciated. William James, American Psychologist and Philosopher The new year has started and private company owners are ramping up business plans for 2020. Their focus is on specific key targets—adding customers, building new…

Eliminate Investor Fraud Claims in 2020: Recent Texas Supreme Court Decision Shows the Way

January 6, 2020

Our first blog post of the New Year looks back at an important case the Texas Supreme Court decided in 2019, and its potential impact on majority owners seeking to avoid fraud claims by new investors. See Int’l Bus. Machines Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224 (Tex. 2019), reh’g denied (May 31, 2019). The case is notable because the Supreme Court reversed the trial court’s judgment following a jury trial that resulted in…

Cautionary Note for Private Company Owners: Third Party Investors Can Create Thorny Problems

December 23, 2019

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Like fish need water in which to swim, private company owners need to secure capital on an almost continuous basis. Capital is necessary to develop the company’s products and services, to retain top talent and to market and promote the business. But securing capital from outside investors can cause headaches for company founders when conflicts later arise with new investors who have discordant views about the company’s strategy and business plans. For this reason, business…

The IPO Dreams Of Private Company Owners: Reality Awaits – Champagne Toasts or Unrelenting Stress

December 2, 2019

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Entrepreneurs with visions of taking their company public one day may look forward to announcing their IPO by ringing the bell at the stock exchange on Wall Street and celebrating at an extravagant closing dinner with the founder team. These heady pre-IPO dreams may quickly run into a number of significant real world challenges, however, that are regularly faced by the management of public companies. This blog post reviews some of the serious issues that…

Invest With Caution: Top 10 Checklist For Investors Purchasing Interests in Private Companies

November 18, 2019

The private company marketplace has become increasingly attractive to investors as the number of opportunities for investment has vastly expanded. There are approximately 6 million companies in the US, but less than 1% are publicly traded on a national stock exchange and more than 85% of businesses with more than 500 employees are privately owned. The attraction for investors is that private companies hold the potential to yield robust financial returns due to the fact…

ETP v. Enterprise: Texas Partnership Created by Conduct — A Dog That Won’t Hunt

November 4, 2019

Following Supreme Court arguments last month, the final chapter in the long-running legal battle between Energy Transfer Partners LP (“ETP”) and Enterprise Products Partners (“Enterprise”) is finally coming to an end. ETP is requesting the Texas high court to reinstate the $535 million judgment it obtained after a jury trial against Enterprise in 2014. The case presents critical issues regarding the manner in which a Texas partnership can be formed, and the importance of these…

Tricks Not Treats: Good Faith Promises to Perform Don’t Hold Up in Shareholder Buy/Sell Agreements Under Texas Law

October 14, 2019

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Minority investors who purchase an ownership interest in a private Texas company are advised to secure an exit strategy confirmed in a Buy/Sell Agreement at the time they make their investment. But investors who look closely at the specific terms of their Agreement may find that the contract contains an unwelcome surprise if it includes “good faith” obligations that have been accepted by the majority owner or by the company. While good faith may sound…

Shareholder Oppression Claims: Looking Past the Urban Myth to Remedies that Continue to Survive Under Texas Law

October 1, 2019

Many Texas lawyers and their private company clients continue to refer to the claim for shareholder oppression as if it remains a viable cause of action under Texas law. And yet, for all practical purposes, the claim for minority shareholder oppression met its demise more than five years ago in 2014 in Ritchie v. Rupe[1]. In this landmark decision, the Texas Supreme Court held that a court-ordered buyout of the minority owner’s interest in a…

Reps & Warranties Insurance: A Game Changer for Business Owners Providing the Opportunity for a Virtually Risk-Free Sale of the Company

September 9, 2019

By Ricky Torlincasi and Ladd Hirsch Historically, the sale of a private company carried with it a significant risk of claims by the purchaser. Months or even years after the sale closed, purchasers would frequently contend that the seller’s representations and warranties in the purchase agreement had been breached. This claim would support demands by the purchaser for the seller to forfeit some or all of the purchase price held back in escrow, and give…

Making the Right Choice: The Obligation to Comply With Fiduciary Duties By The Directors, Managers and Officers of Private Texas Companies