Category Archives: Business

Baby Boomers Drive M&A Market

Now that the economy has hit a certain level of stability, it may be time for baby boomers to revisit selling their companies. At the end of 2012 and with a strong surge in 2013, we saw a rush of baby boomers put their companies up for sale. The general sentiment heard from the baby boomers was that they did not want to go through an economic down turn again while at the helm of a company, especially since they were actively contemplating retirement.

Buyers were also beginning to feel confidence in the improving economy and they were willing to loosen the purse strings a little to accommodate those that wanted to sell, but buyers still wanted fire sale deals.

Two years later we look back and see that 2014 was another great year for selling a company and multiples paid for those companies sold have continued to increase. The year 2015 started even stronger than the year previous for mergers and acquisitions.

One factor that makes this an opportune time for buyers is that interest rates remain low. We have had these low rates for unusual number of years and there are plenty of analysts saying that such low rates can’t continue forever. Many buyers are looking to buy their first company or expand their current business operations while the cost of capital remains low.

Another significant factor driving business sales at the lower end of the market is how the job market continues to lag. Rather than jump from company to company to increase one’s earnings, many are looking at starting a business, buying a franchise, or purchasing an existing business.

All these factors make for a rich market of opportunity for sellers and buyers. If you want to buy or sell a company, let us team up and find the best opportunity for you.

Consumer Price Index – Portland: up 2.1% 1/2012 to 1/2013

From: http://www.bls.gov/ro9/cpiport.htm

Area prices up 0.9 percent over the past six months, up 2.1 percent from a year ago

Prices in the greater Portland area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), advanced 0.9 percent in the second half of 2012, the U.S. Bureau of Labor Statistics reported today. (See table A.) Regional Commissioner Richard J. Holden noted the latest six-month increase was influenced by higher prices for shelter and medical care. (Data in this report are not seasonally adjusted. Accordingly, month-to-month changes may reflect seasonal influences.)

Over the past 12 months, the CPI-U rose 2.1 percent. (See chart 1.) Energy prices declined 0.3 percent, mainly due to a decrease in the price of natural gas service. The index for all items less food and energy increased 2.5 percent over the year.

Consumer Price Index – Portland: up 3.1% 1/2011 to 1/2012

From: http://www.bls.gov/ro9/cpiport.htm

Area prices up 1.3 percent over the past six months, up 3.1 percent from a year ago

Prices in the greater Portland area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), advanced 1.3 percent in the second half of 2011, the U.S. Bureau of Labor Statistics reported today. Regional Commissioner Richard J. Holden noted the latest six-month increase was influenced by higher prices for shelter and food. (Data in this report are not seasonally adjusted. Accordingly, month-to-month changes may reflect seasonal influences.)

Over the past 12 months, the CPI-U rose 3.1 percent.  Energy prices jumped 16.9 percent, mainly due to an increase in the price of gasoline. The index for all items less food and energy increased 1.8 percent over the year.

FREE Nonprofit Company Information

The Nonprofit Association of Oregon

This association is a statewide network that provides resources to nonprofit organizations.  They provide training, classes, and other resources.

Web Site:  http://www.nonprofitoregon.org/

They also publish a great handbook titled The Oregon Nonprofit Corporation Handbook.  This is highly recommended for all non-profit clients.

Print copies may be available at:

5100 SW Macadam Avenue, Suite 360
Portland, Oregon 97239
P: 503-239-4001

 Please call to confirm pricing and that they have copies available.

Oregon Secretary of State

The forms for incorporating your nonprofit can be found at:

http://www.filinginoregon.com/pages/forms/business/dnc.html

The Secretary of State also has a Resource Page for nonprofits:

http://www.filinginoregon.com/pages/business_registry/nonprofit.html

Patent Joint Ownership Issue

Joint ownership can arise from joint inventorship, such as where two or more individuals directly or indirectly collaborate as inventors. This often times happens unwittingly, as the two inventors may not have worked on the development of the invention together or at the same time. Sometimes, the primary inventor does not realize that the other inventor’s contribution raises that individual to the level of inventor. This is because the inventors do not have to make the same type or amount of contribution and the inventors do not have to contribute to every claim in the patent application.

Ethicon was the exclusive licensee of the “sole” inventor of the patent and Ethicon sued U.S. Surgical for infringement. U.S. Surgical investigated and located a “missing” (ie. unnamed) joint inventor and then proceeded to negotiate a license from him. Ethicon challenged the validity of the license. The courts upheld the validity of the license because the “missing” inventor, as a joint inventor, was a joint owner of the entire patent. Ethicon v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998), cert. denied, 525 U.S. 923 (1998).

The cautionary tale here is that even a one percent contributor to a patent will be a joint owner of the entire patent. An owner of a patent who believes that he has exclusive control of the patent may be sadly mistaken and find himself suddenly competing with another company.

The key for the “sole” inventor is to make sure that all others (ie. employees, etc.) who may work on any aspect of the invention have valid employement agreements or valid joint venture agreements that contain the proper assignment clauses. These agreements must be entered into prior to any work by the employee or contractor.

For the purchaser of a patent, proper due diligence will be key to understanding where the potential risks may arise. Due diligence should include review of agreements with employees or contractors working on the development of the intellectual property. Drafting strong purchase agreements and transaction documents can help protect the purchaser. Effective guarantees, warranties, indemnification and assignment clauses can lessen the financial impact, if something unpleasant occurs following the purchase of the intellectual property.

CPI Report – January 2011 – 0.4%/1.6%

From Bureau of Labor Statistics – LINK

Consumer Price Index – January 2011

The Consumer Price Index for All Urban Consumers (CPI-U) increased  0.4 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.  Over the last 12 months, the all items index increased 1.6 percent before seasonal adjustment.

Increases in indexes for energy commodities and for food accounted for over two thirds of the all items increase.  The indexes for gasoline and fuel oil both increased in January, continuing their recent strong upward trend.  The index for food at home posted its largest increase in over two years with all six major grocery store food group indexes rising.

The index for all items less food and energy also rose in January.  The indexes for apparel, shelter, airline fares, and recreation all posted increases.  In contrast, the indexes for new vehicles and for used cars and trucks declined in January.

Over the last 12 months, the food index has risen 1.8 percent with the food at home index up 2.1 percent; both 12-month changes are the highest since 2009.  The energy index has increased 7.3 percent over the last 12 months, with the gasoline index up 13.4 percent.  The index for all items less food and energy has risen 1.0 percent.

Dissenting/Minority Shareholders – Rights

State statutes give certain rights to minority and dissenting shareholders.  Some of these rights can be enhanced or modified by the company’s corporate documents such as the bylaws or articles.

Dissenter’s rights in Oregon are covered in ORS 60.551 to 60.594.  The statute gives a shareholder the right to dissent from and obtain the fair market value of the shareholder’s shares following certain corporate acts.  These acts are: Consummation of a merger; consummation of a plan of share exchange; consummation of the sale of all or substantially all assets of the company; amendment of the articles that materially affects the rights of the dissenter; and conversion of the company to a non-corporate business entity.

If a proposed corporate action, which could create dissenters’ rights, is submitted to the vote of shareholders, the statutes gives very specific requirements for giving notice to shareholders.

If the action is taken without shareholder vote, the corporation again must give a statutory notice to the shareholders regarding their dissenters’ rights.

Generally, A shareholder entitled to dissenters’ rights is not entitled to challenge the corporate action unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.

Besides Dissenters’ rights, there are other potential causes of action that shareholders and the corporation must be aware of.  These include minority shareholder oppression and deadlock, breach of fiduciary duty, derivative actions, and others.

If you or your business have concerns regarding shareholder rights and current or potential disputes caused by an action of a company, please contact us to discuss your options and develop a plan for moving forward.

Do You Have Trade Secrets?

Do you have trade secrets in your business?  If these trade secrets went to a competitor would it hurt your business?

A trade secret gives a business an advantage over its competition.  The secret could be a method, device, business intelligence, or formula that gives a business an advantage over its competition.  By definition a trade secret includes information, including a formula, pattern, compilation, program device, method, technique or process that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable, by other persons who can obtain economic value from its disclosure or use.

Do you really have a trade secret?  Prove it.

Do you actively protect the trade secret?  Do you use non-competition , non-solicitation, and confidentiality agreements?  Do your employees execute such agreements with you?  How about third parties that may have access to the information?

If you don’t, good luck getting a court to see your side of things.  Federal and state laws can help you protect your secrets and help you stop others from using the secrets, but you have to take reasonable efforts to maintain secrecy.  If you don’t treat a “trade secrete” like trade secrets you will not get paid.  Look up MP Medical Inc. v. Wegman.  If you treat “trade secrets” like trade secrets, you will get paid.  Look up H&R Block v. Paramount Tax Services.

Besides the agreements referred to above, a business must have company policies in place that are documented and are actually followed practices.  Practice, practice, practice.  I cannot say it enough.