Build Value with Legal Planning

by | Nov 29, 2023 | LinkedIn Newsletter

A Legal Plan To Build Business Value Without Thinking Too Much

Determine What You Want Out Of The Business

If you are building a business, take five minutes, close your eyes, and think about “What do I ultimately want to do with my business?” Write it down in five words or less.

99.9 percent of the entrepreneurs I work with will answer some variation of “build value.”  Whether they want to sell the business, own it outright, buy out a partner, get out and sell it to a partner, or work on an “earn out,”… It all involves getting from Point A (where you are now) to Point B (where you want to be).

As a friend of mine, Joe Valley, articulated in his excellent book, EXITPRENEUR Playbook, entrepreneurs need to reverse engineer their exit early and often. The EXITpreneur’s Playbook | The Ultimate Guide to Selling an Online Business. This includes the legal strategy towards exit.

The Legal Business Strategy Plan

When I meet with a new or current client, I gauge the stage of the business and have a related mantra of questions, and in my sleep, I can rattle off the related legal considerations/documents. The list is not necessarily linear, nor is it entirely one size fits all; however, it reflects the timing of questions and related legal documents to consider with counsel so your business does not lose value or become unattractive later on in the entrepreneurial journey.




Company Inception

Do you think you have an invention (functionality or design)?Patent search and analysis
 How do you plan to operate (alone, partner up, seek equity financing, a loan)?Analysis of LLC, Subchapter S, C-Corp). Structure operating documents to take into consideration buy-back provisions in case the partnership does not work out.   Take into consideration the tax flow of each structure. (Hint: LLCs are the easiest but not always the most appropriate.)
 How do you plan to finance (self-finance/bootstrap, equity finance, a loan)?See above. Also, SEC Form D and various state blue sky requirements.
 What are the unique elements of your brand experience?Trademark analysis and filing
 What is your supply chain? Where are you sourcing (goods)? Where are you operating (services)?Supplier agreements. Exclusivity agreements. Copyright strategy (or other methods to avoid counterfeiting


What are your sales terms?Terms of use/terms of service
 What is your marketing strategy (omnichannel, Amazon, Shopify, website, etc.)?Privacy privacy/laws
 What is your sales strategy?Review of terms of service of third-party platforms
 How unique is your good and/or service, and how are you going to protect exclusivity?Patent, trademark, trademark, trade secret strategy
 Are you using influencers to sell your product?Third-party agreements
 Are you building your own platform?SAAS agreements
 Are you using a 3PL or other warehouse solutions?Review/collection of agreements.


Are there changes to your business plan or growth that, objectively, you or a third party would believe should be documented?Board resolutions
  Flesh out operating agreement/bylaws
  Review the business plan to ensure the legal plan and business plan pair.
  Sales tax audit and/or gather compliance documents

Growth towards profitability

Are you sales tax compliant?Review of “corporate book” to determine if it can be handed over
 Do your board/manager minutes tell a story that a subsequent involved party would want to hear?Work with accountancy
 Do you have easy-to-understand P&Ls and other financial documents?Work with accountancy. Document owner draws in corporate minutes.
 Does your owner draw make sense based on the stage of the business?Draft/negotiate a detailed term sheet so that the parties agree to a roadmap on documents

LOI/term sheet

Have the parties articulated all material aspects of the sale (including but not exclusively the price/cash consideration and including relevant representations and warranties of the seller, holdbacks, clawbacks, indemnification, timing, inventory adjustments, financing, etc.)Manage due diligence document flow.

Due diligence

Do you have your supporting documentation together that would at a minimum, verify the claims you have made about business value? Have you set aside time to organize numerous schedules and documents as requested by the potential buyer?Document prep and negotiation

Document the exit

Is it to your strategic advantage to take document control?


Do the documents reflect the entire transaction to minimize the possibility of deal failure or clawback?



Do you know how to relax? 

Seems Like A Lot To Think About?

You may think at this point that the title of the article doesn’t match the content.   In other words, it seems like a lot to think about when the title of the article is about building a legal plan without thinking too much!

As a business/IP attorney and the builder of two businesses, I can almost assure you that your business model (and some bumps in the road) is relatively common, generally to both the potential acquirer and the trained legal mind. So, if you know what stage of the business you are at and what your potential business goal is, I most likely know the questions to ask, have the documents, and can prescribe a strategy and a budget.

In summary, the legal plan is not the job of the entrepreneur, who should be thinking and acting on business growth and success. If you blow a legal strategy off (or attempt self-help), you may not sleep well the rest of your life, having potentially either left money on the table or screwed up an opportunity; prepare for exit from the very beginning, build a cost-effective, incremental legal strategy and entrust competent counsel, you will prepare yourself for success while thinking very little about the legal aspects of your business (of course you should be thinking about other aspects of business success!)

If you would like more information, contact Steven Weigler today for a free consultation.


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