2021-2022 Covid-19 Legal Update Archive

Categories : Uncategorized
November 28, 2022

March 29, 2021 – Lions and Tigers and Bears, Oh My

We are one year out from the pandemic shutdown and things look to be improving (assuming you limit your time following the news headlines).  However, as Dorothy famously fretted in the Wizard of Oz, what about the lurking “Lions and Tigers and Bears, Oh My”?

How do you solidify your business foundation, keep moving forward, and possibly grow into new areas in this pandemic-influenced environment?  To help trigger some thought, how about the following questions:

  1. When do your vendor contracts renew?
  2. What are the options if your key supplier goes out of business?
  3. What is this whole “Force Majeure” thing and do I really have to worry about an “Act of God”?
  4. What’s the point of paying for business interruption insurance if it did not cover me with the pandemic shutdown?
  5. I like this virtual work environment, but I am stuck in a long-term office lease with a lot of unneeded space.  What are my options?
  6. I would like my employees to come back, but only if they are vaccinated.  Can I require them to get it?
  7. I have employees who won’t wear a mask, can I terminate them for not complying with my rule?
  8. I have key client agreements coming up for renewal.  What should I be adding or modifying in the agreement in this new pandemic environment?
  9. With my employees working virtually all over the country (and even the world), what taxes am I responsible for?
  10. What pandemic relief programs am I still eligible to use?

This list could go on and on.  What are you going to do with your business and how will you react?  It may be time to sit down with your team (mentors, professional advisors and senior leaders) and continue (or start) the discussion.  Over the next several weeks, we will be addressing these questions and many more in this newsletter.

A few things that may be of interest:

April 4, 2021 – Now I have to worry about what God does!

For most, it is a holiday weekend where you are spending time with family and friends.  Some are even attending religious services and praying to whatever higher power or God they choose.  It is this very higher power or God that is the topic for this week and in case you think this is a religious-themed update, think again.

When is the last time you read through one of your business contracts or reviewed your insurance?  Did you ever notice the following term, FORCE MAJEURE, and wonder what that means?  Below is a sample provision from

“FORCE MAJEURE. Neither Party will be liable for any failure or delay in performing an obligation under this Agreement that is due to any of the following causes, to the extent beyond its reasonable control: acts of God, accident, riots, war, terrorist act, epidemic, pandemic, quarantine, civil commotion, breakdown of communication facilities, breakdown of web host, breakdown of internet service provider, natural catastrophes, governmental acts or omissions, changes in laws or regulations, national strikes, fire, explosion, generalized lack of availability of raw materials or energy.

For the avoidance of doubt, Force Majeure shall not include (a) financial distress nor the inability of either party to make a profit or avoid a financial loss, (b) changes in market prices or conditions, or (c) a party’s financial inability to perform its obligations hereunder.”

Ok, if your eyes aren’t crossed or you haven’t fallen asleep, you are probably saying:  What does this mean?  In layman’s terms, everything described in the first paragraph are reasons that someone could use for not fulfilling their contractual obligation (e.g. a hurricane hits the Gulf of Mexico and a refinery had to shut down).  Everything listed in the second paragraph are the exclusions.

You may not be aware of it, but these types of clauses are in a lot more of your agreements than you think.  I can assure you that as a result of the pandemic, larger organizations and entities are certainly fine tuning these provisions and will be rolling out revised versions in your next renewal.  I would even suggest that some of the terms in paragraph one may end up in paragraph two (think “epidemic, pandemic and quarantine”).

If you have a concern or question about this type of provision, it might be time to review your insurance coverages, contracts or any other formal agreements with your professional team of advisors.  You never know when God will decide to act or we have a repeat of 2020.

A few things that may be of interest: 

April 12, 2021 – Breaking up is hard to do

Did you ever get into a relationship and think it would last forever?  All of sudden circumstances change (e.g., a pandemic) and that “forever relationship” just doesn’t make sense.   When the issue is finally revealed, one side is usually surprised and hurt while the other side is somewhat relieved.  Some of you may be wondering where I am going with this week’s update.

Well, if you own a business and lease space or if you own commercial property and have tenants, you may be faced with a similar situation.  Whether you are a landlord or the tenant, breaking up, in the commercial lease sense, is hard to do.

What can you do? 

If you are the tenant, do not run and hide.  The last thing you should do is stop communicating with your landlord.  Your landlord should know your situation and, if possible, be willing to work with you.  Remember, a commercial landlord does not make money by going after delinquent tenants.  They are looking for a long-term relationship, (some may say the forever kind).  However, if you still can’t come to a resolution, make sure you know your options.

If you are a commercial landlord, try to be open-minded.  Your tenant not paying rent is probably the least of their worries.  Helping them get through a tough situation (like a pandemic) will serve you both well when it comes time for renewal.  If the tenant was a good business pre-pandemic, chances are they will get back to being a good business once things settle down.  However, if the relationship is broken beyond repair, make sure you know how to officially end it.

Whether you are the commercial landlord or tenant, here are some common sections that you should review/understand/update:

  1. Termination – How can the lease be terminated and what are the ramifications for not providing notice?
  2. Renewal term – When is the current term expiring and how soon does notice of a renewal need to be given?
  3. Sublease/assignment – What approvals are needed to sublease the space?  If I am selling my business or buying a new one, does the landlord have to approve the lease assignment?
  4. Confession of Judgment – Most commercial property landlords will have some type of confession of judgment provision in the event the commercial tenant stops paying rent.  It essentially means that the landlord can go right into court and get a judgment against the tenant.
  5. Personal or Business Guarantee – Commercial tenants with personal or business guarantees put their personal and/or business assets are at risk in the event they stop paying rent.

If you have questions about your commercial lease, as a landlord or a tenant, please make sure you take time to review it with your professional advisors (commercial realtor, attorney, accountant, etc.).  That way, when it comes time to break up, it is not as hard to do.

A few things that may be of interest: 

April 26, 2021 – (Updated Based on New CDC Guidance) To Mask or Not To Mask, That is the Question

Initially, this week’s topic was capital structure and financing needs.  However, it will have to wait given updated CDC masking guidance.  Apologies for the repeat, but I received a number of questions related to what can or cannot be required by business owners.  FYI, I have updated the stories/resources at the bottom (highlighted in yellow) for the new guidance.   Initially, this week’s topic was capital structure and financing needs.

As I was doing my weekly reading of Shakespeare….just kidding.  However, I think the famous quote “To Be or Not to Be” can be modified to cover two of the most common questions I get from clients related to workplace safety:

“To Require a Mask or Not to Require a Mask”
“To Require the Vax (sorry, it fits better than the full word) or Not to Require the Vax”

Just as Hamlet was questioning the meaning of life, employers are questioning the importance of policies related to Masks and the Vaccine.  I am not here to make a political statement nor give you the perfect answer.  However, the lists below provide some ways to think through these two contentious topics:


  • Check the current State requirements/recommendations – In case you want a reference guide, check out the list just published by the team at Littler;
  • Review your current company handbook/employee policy manual and see how that fits with the current mask requirements/recommendations;
  • Consult with your professional advisors (legal, hr, insurance, etc.) on your mask policy;
  • Update or modify your company handbook/employee policy manual as needed; and
  • Implement the updated or modified policy


  • Check your State Vaccine availability to determine which of your employees are even eligible – Thanks again to the Littler team for pulling together a list of State vaccination eligibilities;
  • Review your company handbook/employee policy manual to see if vaccinations are addressed;
  • If you do not have a vaccination strategy, consult with your professional advisors for assistance (legal, hr, insurance, etc.);
  • Update or modify your employee handbook/employee policy to address vaccinations; and
  • Implement the updated or modified policy

Below are some good resources related to Coronavirus Safety in the Workplace

I know that these lists seem like they came right out of the book of Captain Obvious, but sometimes simplicity is the best solution.  At the end of the day, you should make decisions around these issues which are the best fit for your business.

Here are a few other things that may be of interest:

May 8, 2021 – Jumping into the Employment Pool

When I owned a business, not in the legal industry, one of the biggest challenges I faced was finding and keeping qualified employees.  Today, as many of you know, that challenge still exists and if anything has only amplified.

On the low end of the pay scale, you can lose an employee or candidate to as little as a few quarters per hour.  On the high end you compete with not only higher salaries, but more comprehensive benefit packages which can be offered by larger organizations.

However, putting all that aside, let’s say you are ready to extend an offer to the perfect candidate.  How do you hire them?  What is the difference between a W-2 employee and a 1099 contractor.  If you think you can onboard someone as a 1099 and they are really a W2 employee, you are putting your company at risk if an audit were to occur.  On the flipside, if you have a true 1099 contractor and you don’t memorialize that arrangement with certain contractual protections, you are also jeopardizing your firm as well.

I am not trying to dissuade you from bringing more staff on board.  Your employees are the lifeblood of your organization.  However, some due diligence and thought into your hiring process is needed to protect your company’s interests.  Below are some helpful tips to consider when you are jumping into the employment pool:

Best of luck with this process and don’t forget that your professional advisors, business mentors and existing staff can be some of your best sources for advice.

Here are a few other things that may be of interest:

May 31, 2021 – To Vax or Not to Vax – More Info

I continue to get questions about what employers can or cannot do in terms of requiring vaccinations.  Thankfully, our network of professional service providers stays on top of this subject.  Tedd Kochman from Littler just sent out an update from the EEOC which was released on Friday.  Below are the key points from the updated technical release:

  • Federal EEO laws do not prevent an employer from requiring all employees physically entering the workplace to be vaccinated for COVID-19, so long as employers comply with the reasonable accommodation provisions of the ADA and Title VII of the Civil Rights Act of 1964 and other EEO considerations.  Other laws, not in EEOC’s jurisdiction, may place additional restrictions on employers.  From an EEO perspective, employers should keep in mind that because some individuals or demographic groups may face greater barriers to receiving a COVID-19 vaccination than others, some employees may be more likely to be negatively impacted by a vaccination requirement.
  • Federal EEO laws do not prevent or limit employers from offering incentives to employees to voluntarily provide documentation or other confirmation of vaccination obtained from a third party (not the employer) in the community, such as a pharmacy, personal health care provider, or public clinic. If employers choose to obtain vaccination information from their employees, employers must keep vaccination information confidential pursuant to the ADA.
  • Employers that are administering vaccines to their employees may offer incentives for employees to be vaccinated, as long as the incentives are not coercive. Because vaccinations require employees to answer pre-vaccination disability-related screening questions, a very large incentive could make employees feel pressured to disclose protected medical information.
  • Employers may provide employees and their family members with information to educate them about COVID-19 vaccines and raise awareness about the benefits of vaccination. The technical assistance highlights federal government resources available to those seeking more information about how to get vaccinated.

Also, if you or your employees are fully vaccinated, the CDC just issued updated their “Choosing Safer Activities” infographic.

Have a great Memorial Day weekend and thanks to all who serve, have served or made the ultimate sacrifice.

Here are a few other things that may be of interest:

June 7, 2021 – Time to Sell – What about PPP?

What about the PPP and its impact on a transaction?  This topic has come up on several occasions recently as M&A in the privately held business world remains strong and looks to pick up more.  The Department of Treasury put out a procedural notice on October 2, 2020 on changes of control and the PPP.  However, I keep hearing of deals where the closing gets delayed because they forgot to take into account the PPP loan of the seller.  Below are the key guidelines to keep in mind:

  • What is a change of ownership?
    • At least 20% of the common stock or ownership of the PPP borrower is sold or transferred;
    • The PPP borrower sells or transfers at least 50% of its assets (FMV); or
    • The PPP borrower is merged with or into another entity
  • What should be done with the PPP loan prior to closing?
    • PPP Note is Satisfied in Full – This is the Captain Obvious solution, so I won’t spend any time on this one
    • PPP Note is Not Fully Satisfied – SBA Prior Approval Not Required Conditions
      • Sale or transfer is for less than 50% of the common stock or ownership interest of the PPP borrower
      • Sale or transfer is an asset sale for more than 50% of the PPP borrower’s assets
      • PPP borrower has submitted its forgiveness application and an escrow account is set up to hold the PPP borrower funds for the amount due on the PPP loan
    • PPP Note is Not Fully Satisfied – SBA Approval Required
      • PPP Borrower does not meet the conditions described under the “SBA Approval Not Required” above (Captain Obvious at it again)
      • PPP Borrower must (1) tell the SBA why it cannot fully satisfy the loan; (2) submit the details of the transaction; (3) submit a copy of the executed PPP note; (4) submit any LOI and Purchase/Sale Agreement; (5) disclose if the Buyer has an existing PPP loan and SBA number; and (6) provide a list of all owners of 20% or more of the purchasing entity
      • If the SBA approves the transaction, the purchaser must assume the PPP obligations and the applicable Purchase/Sale Agreement must have language detailing the assumption;
  • What are the obligations of the PPP borrower and PPP lender post-closing?
    • The PPP borrower (or new owner in the case of the merger) is still subject to all the post-PPP loan obligations;
    • The PPP lender must provide the SBA with the following information within 5 business days of completion of the transaction
      • Identity of the new owners of the common stock or other ownership interest
      • New owner’s ownership percentages;
      • Tax ID # for any owners holding 20% or more of the equity in the business; and
      • Location of and amount held in escrow if applicable

As you can see, there are a number of things that must be considered when you are selling or buying a business with a PPP loan.  Please make sure this critical component is considered as early as possible in the due diligence of a transaction.  Your professional service providers are the best source of assistance with this potential issue.

Here are a few other things that may be of interest:

June 14, 2021 – Its All About The Benjamins

Do you want to know the best time to get a loan?  When you don’t need it.  Many businesses are recovering and some are in quite good financial shape.  With the low interest rate environment, I would suggest you start a discussion with your bank or other third-party lender and try to get a line of credit.  When the economy turns, and it will at some point, a line of credit can provide a much needed safety net when a cash crunch hits.  Also, as many witnessed during the downturn of 2008-09, the access to capital can dry up quickly.

On the flip side, many companies are in hyper-growth mode, but are limited because of capital constraints.   A lot of cash is sitting on the sidelines looking for a home with the right opportunity.  If your business is in need of capital or you are thinking of changing your capital structure, what should you be preparing in advance?  Below are the top things that a business owner should be preparing:

  1. Company records –  When is the last time you looked at your operating agreement or by-laws?  Are the owners in your company records updated and correct?  Have you had a company meeting of the Board lately?
  2. Company financials – Do you have financial statements prepared?  How about your tax and payroll records?  Can you give an indication of what business will look like in 6-12 months?
  3. Amount and Use – How much do you need and what are you planning to do with the funds? Is it for a rainy day, a capital project or something else?
  4. Risks – What could go wrong with your use of the funds?  Do you fully understand the risks and what will you do if any of them occur?
  5. Providers – Who will you approach?  Commercial lenders, Private lenders, Investors, Friends, Family?

This list may seem simple, but it is easily overlooked.  If you are considering capital in any form, I would suggest you work with your professional service providers and get your books and company documents in order before you approach potential funding sources.   At the end of the day, a poor capital structure can be the downfall of your business.

As Puff Daddy famously quipped “Its all about the Benjamins”.

Here are a few other things that may be of interest:

June 20, 2021 – Sometimes the easiest solution is the simplest one

I hope the Summer is kicking off for everyone in a much better way than a year ago.  As I survey the landscape of legal issues that can face companies and organizations, more times than not the root cause is typically based in a breakdown in communication.  Maybe the supplier did not adequately explain all the ins and outs of the product or service being provided.  Perhaps it was not the supplier’s issue and your expectation of the level of service or quality was not adequately told to the person or company providing it.  How about when you don’t check in with a valued employee and they all of a sudden leave?

In each of these situations, you can see that communication is at the heart of the issue.  None of us is perfect in this area.  However, being clear and honest with your intentions will typically lessen the likelihood of a legal issue arising.  Check out some interesting perspectives on this very topic:

You Don’t Need to Be Perfect to Be an Effective Communicator –; Debra Roberts
Abraham Lincoln’s Gettysburg Address Is a Masterpiece in Effective Communication.  Here’s Why –; Julian Hayes II
The Five C’s of Effective Communication –; Cheryl Keates, PCC

Sometimes the easiest solution is the simplest one.

Happy Father’s Day to all the Dad’s, past present and future.

Here are a few other things that may be of interest:

June, 27, 2021 – When Should You think About Selling Your Business? From the Day You Open

The number of businesses being bought and sold across the board is robust and likely to remain that way through at least the end of the year.  The prospect of higher tax rates, an unwillingness to go through another systemic shock (i.e. pandemic, financial meltdown or just plain being worn out) and low interest rates are all key contributors.  However, when you talk to a business owner and ask when they think about selling, typically they don’t have an answer or say that their kids will take over.

In my view the best time to think about selling your business starts when you open the doors and should be a part of your ongoing annual review and strategy.  Also, while your kids are a potential acquirer, they should not be your only option.  Strategic buyers, existing employees, investors and competitors can all be interested if you offer them something of value.

However, if any of them came knocking on your door and gave you a good offer, could you provide them with the needed due diligence materials in a short amount of time?  I argue that many out there could not and if that is the case, you are likely going to lose value on the transaction.

Below are some helpful, ongoing maintenance items that any business owner should maintain for when that acquirer comes knocking:

1.    Financial Statements – At least three years (Income Statement, Balance Sheet, Cash Flow Statement)
2.    Tax Returns – At least three years
3.    Real Estate Agreements – leases and amendments
4.    General Business Agreements – vendor contracts, client contracts, referral contracts
5.    Company Legal Documents – meeting minutes, by-laws (operating agreements) and amendments, buy-sell agreements, insurance
6.    Technology Agreements – websites, social media, cyber insurance
7.    Employment Agreements – handbook, non-competes, employee contracts, offer letters

All of this may seem like a waste if you are a business owner because there are more important things to focus on like getting the next sale.  However, that is a mistake and could cost you in the end.  Check out some of the articles below for other helpful hints and the common theme of keeping your “house in order”:

Thinking About Selling Your Business?  Beware of These Five Deal Killers –

8 Essential Things To Consider Before You Sell Your Business –

Here Are 6 Considerations When You’re Thinking of Selling Your Business –

10 Things To Do Before Selling Your Business – Seattle Business Magazine

The good news is that you are not alone and help is out there from your professional service providers.  Your business accountant, attorney, financial advisor, advisory board or business mentors can all assist with the ongoing maintenance and updating of these business records.  It would be a shame to lose out on a potential sale because your records are poor.

Here are a few other things that may be of interest:

July 10, 2021 – Getting the sale is great, but receiving the payment is even better

If you limit your time watching the news, you will likely start to feel that things are getting back to normal.  With normalcy comes other headaches like getting past due customers/clients to pay.  However, that can be difficult when you may not know who actually purchased your product or service.  This is not for the cash transaction or retail purchases.  I am talking about the client who gets an invoice and pays on terms.

Lately, I have been getting more calls to help my clients with collections.  The first thing I ask is who owes the money.  More times than not, the invoice does not have the entity or appropriate contact information for the client who is delinquent on payment.  This can make things very difficult when it comes to collections.

Below are some key items that I would highly recommend you consider when your client base pays you on terms:

  1. Make sure you have all the accurate information for the client (entity name, EIN, contact name, address)
  2. Do not give terms to new clients.  Run a credit check or set a timeframe for them to earn the right to pay on terms.
  3. Require a partial upfront payment.
  4. Make sure you are clear on the payment terms and send out your invoice promptly.
  5. Provide a slight discount for clients that pay before the due date.
  6. Have a process for following up with clients that are delinquent.
  7. Be ready to collect with a third party (collection agency, business attorney) if your client stops paying

While these items seem simple, they are easily missed.  Getting the sale is great, but receiving the payment is even better.

Here are a few other things that may be of interest:

July 18, 2021 – Alphabet Soup Revisited…from PPP to ERC

As we move through the second half of 2021, I hope that things are getting back to normal.  The alphabet soup of government-sponsored Covid-19 relief programs is still out there.  And to think the English alphabet was not enough, now we have moved into the Greek alphabet with the “Delta” variant making its way around the globe.  For now, I will stick with things like the PPP, ERC and ECIP.

Paycheck Protection Program (“PPP”) – For those that have taken advantage of the Paycheck Protection Programs, below are the links for forgiveness applications.  Check with your lender about the status of their submission portals.

Employee Retention Credit (“ERC”) – ERC is available for all four quarters of 2021.  You can receive up to $7,000 per employee per quarter, if you meet the eligibility criteria.

Emergency Capital Investment Program (“ECIP) – This is the program that provides $9B in capital to Certified Development Financial Institutions or Minority Depository Institutions to provide loans, grants and forbearances for small businesses, minority owned businesses and consumers in low-income and underserved communities.

Here are a few other things that may be of interest:

Helpful Coronavirus Resource Pages

July 25, 2021 – Asset Sale, Stock Sale, Merger….My head hurts

As we move through the second half of 2021, I hope that things are getting back to normal.  The alphabet soup of government sponsored Covid-19 relief programs is still out there.  And to think the English alphabet was not enough, now we have moved into the Greek alphabet with the “Delta” variant making its way around the globe.  For now, I will stick with things like the PPP, ERC and ECIP.

Paycheck Protection Program (“PPP”) – For those that have taken advantage of the Paycheck Protection Programs, below are the links for forgiveness applications.  Check with your lender about the status of their submission portals.

Employee Retention Credit (“ERC”) – ERC is available for all four quarters of 2021.  You can receive up to $7,000 per employee per quarter, if you meet the eligibility criteria.

Emergency Capital Investment Program (“ECIP) – This is the program that provides $9B in capital to Certified Development Financial Institutions or Minority Depository Institutions to provide loans, grants and forbearances for small businesses, minority owned businesses and consumers in low-income and underserved communities.

Here are a few other things that may be of interest:

Helpful Coronavirus Resource Pages

July 31, 2021 – More on business mergers, triangles and battle strategy

As promised, I am spending the next few updates highlighting different merger structures.  In case you did not know (and trust me it is not something you read on a daily basis), the three main merger structures are a Forward (Direct) merger, a Forward Triangular Merger and a Reverse Triangle Merger.  I think the creator of these structures may have either moonlighted as a spiritual advisor or spent time in battle, but what do I know.

Below is a rundown of the Forward (Direct) Merger:

A forward merger involves the Selling company (the “Seller”) merging directly into the acquiring company (the “Purchaser”).  The Seller ceases to exist post-closing and the two companies become a single entity under the Purchaser’s name and structure.


  1. It is very simple.
  2. It is tax-friendly for the Purchaser because it is usually treated as an asset acquisition.  Therefore, the Purchaser gets a step-up in basis on the Seller’s assets equal to the purchase price.  In layman’s terms, it means that in addition to the larger depreciation deductions available, any future sale of the Seller’s assets would result in a smaller tax liability.


  1. Double taxation is still a risk.  First, the transaction is taxed at the corporate level and then again at the shareholder level.
  2. The Purchaser is generally not shielded from the liabilities of the Seller.
  3. The Purchaser usually has to get third-party consents for any contracts that the Seller had in place.

Below are some good overviews of the different transaction structures (repeat from last week):

August 9, 2021 – Phil Jackson may have an M&A career

As Phil Jackson showed, triangles can be a very powerful tool for winning championships.  They are also the basis for two successful merger strategies.  Perhaps if Phil Jackson was not a coach, he would have been a successful M&A advisor.  In today’s update, we look at the Forward Triangular Merger.

A forward triangular merger involves the Purchasing company (the “Purchaser”) acquiring the Selling company (the “Seller”) through a subsidiary company (the “Subsidiary”) that is wholly owned by the Purchaser.  Post-acquisition the Seller disappears and the Subsidiary is all that remains.


  1. Tax – The Purchaser can use a combination of cash and stock (up to 50%) to acquire the Seller through the Subsidiary.  This can provide tax benefits for the Purchaser.
  2. Liability – Because the Seller is acquired through a subsidiary, there is a liability shield in place to provide protection for the Purchaser from pre-acquisition issues of the Seller.


  1. Third Party Consents – The Purchaser usually has to get third-party consents for any contracts that the Seller had in place.

Below are some good overviews of the different transaction structures (repeat from last week):

Here are a few other things that may be of interest:

August 16, 2021 – The Beauty of the Triangle Offense

One of the beauties of the triangle offense is that it works in both directions.  In a similar way, the reverse triangular merger strategy has the same benefit.  The Purchasing Entity (the “Purchaser”) creates a subsidiary, which then acquires the Selling entity (the “Seller”).  The key difference is that the Seller, through the Purchaser’s subsidiary, retains its identity.


  1. Contracts – Because the Seller retains its identity, any third-party contracts that were previously in place do not have to be assigned or modified (e.g., think about the issues of becoming a new vendor to the government or a large corporation)
  2. Less complexity – Because a true merger or asset acquisition is not taking place, the acquisition of the Seller by the Purchaser is typically faster.  On the flipside, if the acquisition does not work out, the Seller can be resold.


  1. Liabilities – The Seller may have legacy liabilities (e.g., lawsuits, taxes, etc.) which will have to be dealt with by the Purchaser.
  2. IRS Requirement to be tax free – 80% of the Seller’s stock must be acquired with voting stock of the Purchaser (i.e., this is not heavy cash up front deal for the Seller).  This may make these transaction structures less attractive for a Seller looking to truly exit.

Below are some good overviews of the different transaction structures (repeat from last week):

Here are a few other things that may be of interest:

August 23, 2021 – The Best of Both Worlds – Both a Stock and Asset Purchase in One

As if the M&A world could not get any more complicated, I am going to blow your mind again.  There are situations where an acquisition could be treated as both an Asset and a Stock purchase at the same time.  I know, you are probably saying that this has to be a mistake that was missed on some 10,000+ page unrelated bill passed by Congress.   However, it is not.  Yes, the structure I am talking about is what’s known as a 338 election.

Section 338 of the Internal Revenue Code allows for a corporate buyer and the selling entity to jointly elect to treat a stock purchase as an asset purchase for federal tax purposes (FYI, Section 336 is the applicable code provision for non-corporate buyers like LLCs).  The selling entity is treated as selling its assets to the corporate buyer for the agreed-upon stock purchase amount.  In simpler terms, the Buyer gets a tax basis step-up advantage and the underlying selling entity remains in existence.

A regular 338 election is not typically used because there is a double taxation issue.  The Seller would be taxed at the entity level for the gains on its asset sale and the seller’s shareholders would then be taxed on the sale of their equity.  So, what do you do?

If you read Section 338 a little more (good cure for insomnia), you will see that there is a special 338(h)(10) election that can be made to alleviate this double taxation issue.  Essentially, the stock sale is ignored for tax purposes if the requirements below are met:

  • The Selling Company is an S Corporation; or
  • The Buyer buys the stock of the Seller from one or more of the “corporate” shareholders of the Seller (i.e., you can’t buy stock from individual shareholders).

If your transaction looks like the above, then a 338(h)(10) might be right for you.  However, keep in mind that the underlying entity remains along with its liabilities.

Your professional business advisors (accountants, attorneys, financial advisors, etc.) are the best place to go and discuss this structure.

FYI, next week we will be getting into less complex issues like required vaccinations and masking at the workplace.  Until then, keep moving forward!

Below are some good overviews of the different transaction structures (repeat from last week):

Here are a few other things that may be of interest:

August 30, 2021 – Delta, Delta, Delta, Can I help ya, help ya, help ya?

Delta is a very popular word over the last few weeks.  Unless you have been living under a rock, it is the latest strain of Covid that is permeating its way through every part of our lives.  However, the Delta I am referring to is the airline.  Last week, the airline announced that starting November 1, any unvaccinated employee would face $200 monthly surcharges Talk about turning the tables!

This triggered my review of ways that companies and governments are getting people to vaccinate.  See below:

Maybe the news this past week that the Pfizer Covid vaccine was fully approved by the FDA will help.  At the end of the day, an employer should be risk assessing how they want to approach their vaccination requirements for their staff.

What role does an employee play, who do they interact with and where do they work are just some of the many questions to ponder.  Your professional service providers are the best place to find these answers.

Oh, and you may be wondering what the third Delta was from my subject line.  I was watching some old SNL skits and the classic sketch from 2013 popped up.

Here are a few other things that may be of interest:

September 8, 2021 – I respect your opinion as long as you agree with me!

It is hard to believe that in a week, it will be 20 years since the tragic events of 9/11.  At the time, my wife and I lived in NYC and I was working at my office downtown that awful day.  As I watched in horror as the second plane hit the South tower from my office window, I can remember my feelings of shock, sadness, fear and ultimately anger as if it were yesterday.  One thing that I can tell you is that in the weeks after, everyone, and I mean everyone, in NYC (and around the country) worked together towards a common goal, which was recovery.

Fast forward to today, and we as a nation are in a crisis yet again.  However, this time, the togetherness and working toward a common goal are not readily apparent. Vaccinations, masking, coming back to work, working from home and more have all caused a lot of friction in the workplace (and pretty much everywhere else).

Unfortunately, social media and unclear guidance from our leaders has not helped the situation.  I don’t recall where I heard it (probably a comedian), but I think the following quote is unfortunately applicable in the current times:

“I respect your opinion as long as you agree with me”

When this type of mentality becomes pervasive in your organization, bad things typically result. It is critical to check in with your team and be open to others’ perspectives.  It does not mean you have to agree with them but be respectful and know that you are working towards a common purpose.  More importantly, as long as everyone is on board with the direction of the business, the differences will work themselves out.  Below are some good communication strategies that successful organizations embrace:

To wrap up, I will share this quote from Henry Ford:

“Coming together is a beginning.  Keeping together is progress.  Working together is success.”

Here are a few other things that may be of interest:

September 13, 2021 – One more bit at the Government Apple!

Last week, the SBA opened up the applications for the revised Economic Injury Disaster Loan (EIDL).  The terms are as follows:

  • Use of Proceeds – Working capital (i.e., regular operating expenses like payroll, rent/mortgage, utilities and payment of business debt)
  • Maximum Amount – $2M
  • Term – 30 years
  • Rate – 3.75% (profit) / 2.75% (non-profit)
  • Deferment – First 2 years (interest accrues)
  • Collateral – required for loans >$25k
  • Personal Guaranty – required for loans >$200k

Here are the FAQs for the EIDL and the Application

I was hoping that these types of programs would fade away as the economy continues to recover and grow.  However, it looks like we all get one more bite at the Government apple.

Here are a few other things that may be of interest:

September 20, 2021 – Making the complex, more complex

The topic of the day this past week was the proposed $3.5 trillion spending package put forth by the House.  Talk about making the complex even more complex.  This momentum to raise taxes has resulted in a surge of business owners trying to complete transactions before the end of the year.  While I know enough about taxes to be dangerous, I will not profess to be a tax expert.  So, here are some rundowns of the proposed spending bill that I thought may be of interest to you:

I will leave you with some quotes that I think are applicable to this week’s topic:

The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan

Dear IRS, I am writing to you to cancel my subscription. Please remove my name from your mailing list.” – Snoopy

People who complain about taxes can be divided into two classes: men and women.” – Anonymous

Here are a few other things that may be of interest:

September 27, 2021 – Networking or Notworking

As we go out and about and start to have more face-to-face meetings, I thought it might be helpful to talk about networking.  In my experience, this business development tool has been the most effective use of my marketing time.  A few quick tips that may be of use in your networking ventures.

  1. Say Hello – Introduce yourself and ask the other person who they are and what they do.  This is so often missed and ignored by people when they enter a room.
  2. Ask questions – At the start of the conversation, look to learn more about the other person before you start talking about yourself and your business.  Do not start the conversation trying to sell your services.
  3. Be specific – Make sure you know what you do and who your target market is.  For example, if you answer that you are an attorney and you practice law, I can guarantee that you will not be memorable to the other person. However, if you say that you are a transactional attorney looking to meet the next generation of ownership in a family business, then you are likely to trigger some thought.
  4. Pay it forward – Try to be thinking of a way that you can help the person you are networking with.  If you think they are a good person to add to your network, try to pay it forward and help them out.
  5. No expectation – If you go into these events expecting to get automatic referrals, you will be very disappointed.  These relationships take time to develop.  Be patient.

I can tell you that the above items are some of the keys to networking success.  If you are looking for business at the start of a conversation, your networking will be more like notworking.

Here are some helpful articles related to effective networking:

8 Secrets From Power Networking Pros (
The Career Changing Power of Networking | Simon Sinek
Learn to Love Networking (

Here are a few other things that may be of interest:

October 4th, 2021 – Employer Vaccination Mandates – C’mon, do we have to?

Over the last several weeks, many of our clients with 100+ employees or those that do business with the Federal Government have been asking about the vaccination mandates.  One of the most common issues is the very real fear that 20-30% of their workforce will walk out the door if they require a vaccine.  Like anything, when these mandates come down, the call volume increases from clients with questions about whether it applies to them.  “C’mon, do we really have to abide by this mandate?”  Well, I hate to say it, but the answer is probably yes if you fit into one of those categories.

Below are the latest updates from this Executive Order:

Safer Federal Workforce

OSHA 100+ Employee Mandate

Here are a few other things that may be of interest:

October 11, 2021 – Houston, we have a problem!

In the movie Apollo 13, one of the most famous lines is “Houston, we have a problem”.  Thankfully, due to the efforts of both the Apollo 13 and NASA teams, the problem was solved and they returned safely from space.

Well, if you are a business owner, I can assure you that some type of crisis will happen during your leadership that will require a response and a solution.  What do you do?  Unfortunately, many will run when they should fight and others will fight when they should run.

Having a process in place for your company’s response and handling of a business crisis (no matter big or small), will not only serve you well when it happens, but also gives you and your staff a level of comfort that you have a plan in place.  Below are a few tips that may be of use to you:

  1. Establish a crisis response point person or group
  2. Task the response team with gathering the facts when a crisis happens
  3. After reviewing the facts, come up with the crisis response strategy
  4. Notify your employees of the crisis response strategy
  5. Put the crisis response strategy into action

I know these tips may seem simple, but you would be amazed how many times they are missed.  Below are some helpful guides for business crisis response planning:

Crisis Management:  Do You Have The Right Plan? –
Crisis Management – Harvard Business Review
Crisis Management –

Here are a few other things that may be of interest:

October 25, 2021 – Nothing but Net – We’ve Moved – 96 S. George Street, 5th Flr, York, PA 17401!

Sorry I missed reaching out last week.  The last two weeks have been a little busier than normal for MPL as we recently moved.  Starting 10/25/21, our new address is 96 South George Street; 5th Floor, York, PA 17401.

With our move comes a new topic for us to discuss.  What’s up with all the “net” leases?  Triple net, absolute net, nothing but net.  Well, if you want to know, below are some highlights:

  • Full Service Lease (gross lease) means the tenant is responsible for paying the base rent.  The landlord covers all the building expenses, including maintenance fees, insurance, and real estate taxes. Make sure you look at what is and is not included in common area maintenance expense if it is part of the lease.
  • Modified Gross Lease – means the tenant pays base rent, utilities, and some portion of operating costs, which varies depending on the circumstances.
  • Triple Net Lease – means the tenant pays rent, utilities and all of the property’s operating expenses (e.g. maintenance fees, building insurance, property taxes, etc.). Think of this lease as the opposite of the full-service lease.
  • Absolute Net Lease – means the tenant pays everything (yes, everything).  This type of lease typically relieves the landlord from all responsibility for the building in every case (except ownership). The tenant must cover all building expenses, including any maintenance or repairs to the building (i.e. capital costs).

Of course, everything is negotiable and each of the leases described above can be modified.  More times than not if you are small business leasing office space, the triple net lease is used.  Make sure you chat with your professional advisors (business attorney, business accountant, commercial realtor) to see which is the best fit for you and your company.   Below are some helpful articles:

Here are a few other things that may be of interest:

November 1, 2021 – You have to pass it to know what’s in it….Huh?

Unless you have totally shut off all news, you are well aware that the $3.5 Trillion…wait, its $1.85 Trillion…how about $1.75 Trillion and we throw in a free trip to Hawaii?  Ah yes, the political wrangling that is going on and right before an election is fascinating (not really).  I have read overviews of the proposed infrastructure bill from a number of media outlets and I still can’t figure out what are the consistent parts. Given the continual shifts, I would not be surprised if Congress’ next selling points will be “you have to pass it to know what’s in it”.  Sound familiar?

All this plus COVID makes the job of strategic planning even trickier (shameless Halloween reference) this year.  Now is the time where you should be meeting with your internal team and external professional business advisors to see if the goals you set are the goals you are still moving towards.  Also, you should be assessing what shifts should be made when things like whatever name they choose to give this new bill potentially gets passed.  Sitting still and waiting for Congress to pass a bill to know what is in it is not the smartest move.  Below are some good articles to get you thinking about your strategic goals:

Hope you and your family have fun trick or treating tonight.  I can assure you that the next two days will be more tricking than treating given that 11/2 is election day.

Here are some other items of interest:

Helpful Coronavirus Resource Pages

November 8, 2021 – VAX Mandate….Not so fast my friend….5th Circuit Says Wait!

As many of you are aware, the Biden Administration, through OSHA, provided more guidance on the upcoming vaccination mandate for employers with 100+ employees last week.  If you are really looking for something to read, here is the full text of the mandate.  For the cliff notes, here are links to the Summary, the FAQs, and the Fact Sheet.  Also, below are some of the key points:

  • Businesses have until January 4th to ensure employees are vaccinated;
  • All unvaccinated workers must begin wearing masks by December 5th and provide weekly negative Covid tests after the January 4th deadline;
  • Businesses are not required to pay for the weekly tests (unless State or local laws or labor contractual obligations are in force); businesses do not have to pay for masks either
  • Federal Contractors, who previously had to comply with the vaccine mandate by December 8th, have now been pushed back to January 4th; and
  • Exemptions for religious beliefs, disabilities and medical conditions are applicable.

However, in the words of Lee Corso: “Not so fast my friend!”  Yesterday, the 5th Circuit Court of Appeals (TX, LA and MS for non-lawyers) issued a a stay on the mandate saying there may be “grave statutory and constitutional” issues with the rule.  The Biden administration is directed by the Court to respond by Monday at 5pm.  Stay tuned, but I have a feeling this will end up at the Supreme Court.

Here is another item of interest:

Helpful Coronavirus Resource Pages

November 10,2021 – Ugly Surprises in Vendor Agreements: Attorney James Sanders on Centricity B2B Podcast

This week, our very own James Sanders was a guest on the Best Kept Secret podcast by Jay Kingley, covering the topic “Ugly Surprises in Vendor Agreements.”

In the podcast, James covers a variety of important considerations with vendor agreements, including:

  • Why business interruption insurance won’t cover damages from pandemics
  • Force Majeure – what it is and why you should care
  • How a business owner should think about vendor management
  • Benefits to a business from properly managing their vendor agreements
  • 3 steps to implementing an effective vendor management system
  • Learn about James and MPL Law

If you are a business owner or oversee vendors in your professional role, James’s insights in this podcast episode will help you strengthen the foundation of your business.

You can listen to the podcast episode and read the transcript on Centricity’s website here, or view the video footage of the podcast episode below:

Learn more about Centricity here, and please do not hesitate to reach out to James Sanders at or any of our attorneys if you have needs related to business law or vendor agreements.

November 29, 2021 – Capital raising and the Bermuda Triangle– Be prepared and beware of dangerous waters

I hope that you and your family enjoyed the Thanksgiving holiday.  One of my friends recently referred to Thanksgiving as the entry point into the “Bermuda Triangle” of the holiday season (Christmas and New Years would be the other two points).  Clearly, there have been some uncomfortable moments for this person during this time period.  However, the whole Bermuda Triangle concept spurred the topic for this week’s General Counsel Corner.

Over the last few weeks, I have received repeated inquiries from clients that are looking to invest in manufacturing businesses (not to run them but to invest in them).  Keep in mind, I would consider the people that are reaching out to be in the “sophisticated investor” class.  When I ask why manufacturing, their response is that they believe the next wave of capital investment for companies will be an expansion of the domestic footprint because of the supply chain issues.

What does this mean if you are a domestic manufacturing business looking for capital?  Well, for starters, there appears to be a lot of interest from third-party investors.  However, even with the heightened interest, you better be ready to tell your story, define your need for capital and know what type of investor you want to bring on board.  If not, you will be floating into some dangerous waters (see the Bermuda Triangle link?….okay it’s a bit of a stretch) and may not make it out if you bring on the wrong type of investment and/or investor.

Your company’s leadership team, your mentors, and professional advisors are all good resources to plug in with when developing your plan to raise capital.  Below are some talking points/questions and articles to consider:

  • Talking Points/Questions
    • When is the last time you looked at your corporate documents?
    • Do you have up-to-date corporate records?
    • How often do you update your financial reports?
    • Do you have a good financial forecast?
    • If you were to receive $100,000, $1,000,000 or more, what would you do with it?
    • If someone gave you capital, what kind of return could you offer them?
    • What are the risks of investing in your company?
    • Do you want to take on debt or give equity to the third-party investor?
    • What do you think your company is currently worth?
  • Articles

A few other items of interest this week

Helpful Coronavirus Resource Pages

December 6, 2021 – Company Culture – The Greatest of all Employee Retention Strategies

2021 is rapidly coming to a close and hopefully, you are at least thinking about or better yet drafting your 2022 strategic plan.  I can guarantee that somewhere on that plan is hiring or adding staff.  That would certainly match the recent survey results from NFIB.  What about retaining existing staff?

Most will default to first looking at the pay packages of their employees as the key retention strategy.  However, company/organization culture is just as if not more important than the pay.  When someone asks what your culture is all about, what is your answer?  If your staff was asked the same question, would they give the same answer?  Below are some articles on company culture that I think are worth a read.

In each of these articles, I think you will see that pay is not really mentioned.  While it is still a very important variable, if that is the sole reason someone is staying in a role with your firm, then what do you think they will do when a call comes in from a competitor offering more money.  Company culture can be one of the greatest employee retention strategies.

“If you are lucky enough to be someone’s employer, then you have a moral obligation to make sure people do look forward to coming to work in the morning.”  – John Mackey, Whole Foods

Helpful Coronavirus Resource Pages

December 20,2021 – Time for The Annual Airing of Grievances

I don’t know about you, but it is tough to keep track of all the different state and federal mandates, suggestions and however else they want to push masking and vaccination requirements.  Here in PA, we recently (last week) had our highest court lift the mask mandate for Schools.  I am sure the next School Board meetings will be business as usual with this off the table (yes, read heavy sarcasm).

In the business realm, the various Federal vaccination mandates are at different stages in the legal system.  As of yesterday, the Sixth Circuit Court of Appeals ruled that the stay on the 100+ employer vaccination mandate should be dissolved (Translation:  the employer mandate is allowed).

With all that being said, I am sure you are thoroughly confused.  I am as well, which is why I will point you to a great resource from the Littler team (thanks Tedd Kochman) to provide updates on the vaccine, masking and covid litigation status questions.

COVID-19 (Coronavirus) Resources | Littler Mendelson P.C.

Other than that, I want to wish everyone a Merry Christmas, Happy New Year or whatever else will be celebrated from now until year end (maybe Festivus?).  With everyone having an opinion on Covid, perhaps the Annual Airing of Grievances would be a good way to settle it once and for all.

FYI, in case you could not tell, this will be the last update for 2021 barring anything major happening.  I look forward to reconnecting in 2022 with everyone!

Other Useful Items

Helpful Coronavirus Resource Pages

January 10, 2022 – Oh Magic 8 Ball, What Will SCOTUS do?

The Supreme Court heard oral arguments on Friday related to the Biden vaccine mandate for 100+ employers in the US.  Who knows what will come about?  If you remember the argument over Obamacare, where the Administration argued it was not a tax, while the Supreme Court ruled, through Chief Justice Roberts opinion, the law was okay because it was a tax (not sure how that one came about, but what do I know).  The questions from the Court on Friday also leaves one wondering.  I think my friend and fellow legal colleague, Tedd Kochman from Littler, put together a good perspective from his working group:

“My Vaccination Working Group (and my contacts withing that specialized Group) are, like everyone, CLOSELY watching the SCOTUS/OSHA ETS issue.   Bottom line is that, within our Vaccination Working Group, the consensus seems to be (based on oral argument) below:

  1. Thomas was active in questioning out of the box, which as we all know NEVER happens – he’ll write the opinion or dissent for certain, depending on where the numbers land.
  2. It looks like three hard votes to reimpose the stay (Thomas, Alito, Gorsuch), three hard NO votes to allow the mandate (Kagan, Breyer, Sotomayor).  Barrett and Roberts sound like they are leaning toward a stay, or some direction that OSHA narrow the standard.  Kavanaugh is probably a YES based on major question doctrine.

Again, just some “crystal ball” attempted reading!”

I am sure both sides will not get everything they want.  I guess you could look at the Magic 8 ball to tell you what SCOTUS will do.  What can it hurt?

Here are some other items of interest:

Helpful Coronavirus Resource Pages

January 17, 2022 – Biden Mandate Goes Down, SCOTUS Style

This past Thursday, the Biden vaccine mandate went down….kind of.  In typical Supreme Court style, the result was not what everyone was expecting.  The Court blocked Biden’s vaccine-or-testing rule for private businesses with 100+ employees but reinstated the administration’s vaccine mandate for healthcare workers.

So, what does that mean for you and your business?  Essentially, you as a business owner can still mandate vaccination, but the choice is up to youwith a caveat.  State and local governments can put in place vaccination requirements (check out this link from Littler for a State by State overview).

The bottom line:  I don’t see this fight as being anywhere close to being over.  Governments can go about it in different ways.  For example, look at the healthcare worker reasoning.  If you want to engage in Medicare programs as a hospital, you have to follow the Government’s rules.  If not, you are out of the program.  The same may hold true if you are a government contractor (there is still ongoing litigation).

I would not suggest you throw out your employee vaccination plans.  If anything, I would continue to review and modify them as needed with your professional advisors and leadership team.  At some point, this pandemic will move to an endemic, but right now we are still in the “eye of the storm”.

Here are some other items of interest:

Helpful Coronavirus Resource Pages


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