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Los Angeles Corporate & Securities Law Blog

Avoid compliance issues during a merger with attorney's help

As discussed in last week's post, there are a number of reasons different companies decide to merge with one another. Some of these reasons include strengthening their own products by merging with a competitor company or merging with a complementary company to expand their market.

Whatever the reason, there is little doubt that mergers affect not only the companies involved, but they also affect the market and the consumer. To ensure that consumers are not taken advantage of and that the merger is legal, these complex business transactions are monitored not just by one federal agency, but by two: the Department of Justice and the Federal Trade Commission. For companies, this means they must ensure compliance with numerous regulations and stay on top of changing laws.

Why do companies merge?

Readers of the Los Angeles Corporate and Securities Law Blog may have read about various companies merging, such as last week's post about a merger causing a jump in stock. However, readers may not be entirely sure what a merger is or why companies decide to merge with one another.

A merger is when two or more companies combine with one another. Usually these two businesses are equal in size and power and have decided to move forward as one business. One of the major reasons companies decide to merge is because it helps save on costs of production. In fact, where the two companies were previously competitors, it may end up being a strategic alliance. It is also one way for companies to engage in fund formation that can assist companies in entering a new market or to launch a product it could not have done otherwise.

Standard Pacific, Ryland Group announce merger, stock jumps

Los Angeles is home to some of the most innovative and powerful companies in the world. Another way to boost the value and power of a company is to merge with an equally powerful company, thereby creating a larger, more diversified, and, in some cases, a more profitable company. Two such southern California-based companies have decided to combine into one, creating a larger home building and designing company to meet consumer demands. Stock prices for both companies jumped in lieu of the merger news.

The beauty of the merger between the two companies is that each company focuses on a niche market. This means that when merged, the newly formed company will cover the majority of the home-building and designing market. In a press release, the representative for the companies said that the deal would give the newly merged company a more diversified product line and wider geographic reach. The two companies have yet to decide on a name for their recently merged business.

What federal and state laws regulate the sale of securities?

Last week on our blog, readers learned the basics of securities and their value on the stock market. Since securities and matters involving them are heavily regulated by both federal and state legislature, it is important to know what laws and regulations apply to securities transactions.

The first securities law enacted by Congress was the federal Securities Act of 1933.The public offering and sales of securities in interstate commerce are regulated by this law. The Securities Exchange Act of 1934, also enacted by Congress, created the Securities Exchange Commission and tasked it with the job of administering federal laws. Through various provisions, the Commission has been entrusted with the job to maintain markets that are both honest and fair and to protect investors and the public by forbidding deceptive and manipulative practices.

An overview of securities

Many Los Angeles residents may have heard of the terms 'securities' and 'security trading' before but may not be aware what the terms mean. Notes, treasury bonds, certificates of interest, bonds and transferable shares and investment contracts are all examples of securities. But what, exactly, is a security?

On its own, a security is not valuable. Their value is derived from the claims the owner can make on other assets and earnings of the issuing party and the voting power that comes with the claims. This means that their value is dependent on the issuing party's financial condition, product and markets, and the competitive and regulatory market, among other things. This makes securities laws and regulations very important, as they aim to ensure that investors get the most accurate information about their investments, including the type and value of their interest.

We competently guide our clients through business bankruptcy

Los Angeles business owners know that the futures of many are intertwined into the success of their business. Not only are they themselves depending on the business' success, but all their employees are also counting on them for their salaries and benefits. When a business or company is doing well, everyone benefits from it, but when they are plagued with cash flow problems, everyone suffers from it together.

As previously discussed on this blog, one way to get rid of creditors is to declare commercial bankruptcy or individual bankruptcy, depending on the type of business you own. Business reorganization or a liquidation of assets may be one way to get financial matters back on track before it's too late.

How is business bankruptcy different from personal?

When individuals are struggling with finances, one of the options they have to protect themselves against creditors is filing for personal bankruptcy. But what happens when a Los Angeles company is facing cash flow problems and can no longer generate a profit? They may also be able to avail the protection offered by bankruptcy, but in a different way.

Similar to personal bankruptcy, when a commercial bankruptcy petition is filed all creditors must cease making financial demands and follow the automatic stay granted to the business. The business must submit financial statements outlining their assets, liabilities, income, and expenses. Also, the statement must include a description of the company's financial affairs and contracts. Under which chapter business owners file for bankruptcy depends on the type of a business.

Los Angeles-based commercial real estate company acquired

The acquisition process can be an exciting growth opportunity for any company which is why it is important to possess a careful knowledge and understanding of the process. National commercial real estate services company Jones Lang Lasalle (JLL) is expanding its retail business. The company recently acquired Los Angeles-area Wilson Retail Group which is one of the top independent retail brokerages based in Los Angeles. Wilson Retail Group is also a capital markets firm and JLL views the acquisition as a good fit.

The acquired company offers landlord and tenant representation; investment sales' excess property disposition; and consulting services. Its portfolio includes 9 million square feet of retail space in 75 shopping centers throughout the region. The 16- person team that has built the retail leasing agency in the region will go to JLL with the acquisition.

Importance of a strategic plan for business formation

As discussed previously on the Los Angeles Corporate and Securities Law Blog, both a strategic plan and a business plan are important documents to formulate when beginning a business and, though both are similar to one another, their slight differences make it important to consider drafting both. A strategic plan lays out the steps needed to achieve the business or company's future goals and is usually updated annually to reflect priorities and objectives for the upcoming year. In addition to this, strategic plans also outline where a company hopes to be in specific time periods, such as five years later or 10 years on.

For a strategic plan to be useful, it must be realistic. The numbers at the base should be realistic and the expectations should be based in reality. For example, even as a company is set to expand its business and expects to make a lot of profit, they must take into account outside risk factors such as competition from other businesses and even political forces outside of their control.

What is a business plan and how does it help?

When Los Angeles residents decide to open their own business, they probably have a vision of what they are aiming to do and how to go about achieving those goals. Though their creativity allows them to hold all this information in their head, they may benefit from getting it all out on paper and drafting both a business plan and a strategic plan.

Though both plans allow the developer to recognize and outline the costs associated with running the business, the business plan specifically outlines a picture of the business and the goals to be achieved while the strategic plan lays out the steps that need to be taken to not only achieve those goals but to even surpass them. Both can be essential tools in business formation.