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Business Law

Issue

 

An investor and trustee of Company A wished to acquire Company B, a airline technology company. In acquiring Company B, it was imperative that James enter into an agreement with Company C, a company through which James had to go through to complete the purchase of Company B. The legal counsel for Company C had already drafted an agreement for the acquisition of Company B, but legal counsel for Company C had only Company C’s interests in mind. In this situation, it was best for James to have our office review the agreement before entering into it in order to ensure that he was not being misled in the agreement. Sometimes, in when parties involved in the actions taken by the business have potential to reap great rewards for the business deal, those parties can become pushy for the deal to go through. This was the case in the acquisition; the party in Company C was pressuring James to quickly complete the deal. However, our office found some terms in the agreement that may not have been in James’ best interest. Such unsatisfactory terms included things such as Company B’s outdated bylaws conflicting with its articles of organization in the agreement, an ambiguous term for James’ appointment to Company B’s board, lack of specific account information into which investments should be transferred to, and ambiguity of “other fees” in which transferred funds may be applied to.

 

Resolution

 

Some important factors that needed to be evaluated when entering into this agreement were legal factors such as what is the purpose of Company C in this business deal, who owns Company C, and what is James’ relationship to Company C. Other factors were business factors such as what is the turnaround time for James’ return on investments, what are the potential profits of entering into this agreement and are they less than or greater than profits made before entering into the agreement, and what are the costs and risks associated with installing Company B’s products into airplanes. In asking these types of questions and ensuring that James was not pressured by parties involved in the deal, we had ambiguous language in the agreement specified more, and terms in the agreement tailored so that James’ best interests were also included. As a result, James was able to smoothly have Company A acquire Company B through negotiations with Company C in only 3 weeks.