business law questions 19

Business discussions

You are feeling very good about your life. This positive feeling is due in large part to your recent promotion to national sales manager of Ever-Present Technologies Inc. Your company offers full-service consulting and computer sales to manufacturers, especially those in the consumer product areas.

Two weeks into your new responsibilities, you are beginning to lose your good feelings. This change of spirit results from hearing about various activities among your sales personnel. First, you learn one of your new sales representatives has been visiting with a competitor’s salesperson about each focusing on particular customers while agreeing not to call on the other’s customers. Second, a district manager reports that a large, extremely valuable customer is asking for a pricing structure that is more favorable that prices offered to any other customers. The district manager expressed concern that your company may lose this customer’s business.

(1) What legal worries do you have about each of these situations?

(2) What type of information should a training/education program for your sales force include?

(3) What are the ramifications if you decide to ignore these situations as you try to return to your “happy” state of mind?

Two former roommates from college contact you about an opportunity to make big money. Their idea is to start a business to market a new video game system (the computer science major developed the software; the engineer created the hardware). They estimate it will take $5 million to $10 million to begin production, and they want to raise money by selling shares in the company to investors. They think their product is superior, and they are aware of the time factor. They want to get started as soon as possible. Your field of expertise is securities marketing.

(1) Can the three of you just begin advertising for investors?

(2) What steps must be followed to comply with the law?

(3) How much time is needed before potential investors can be approached legally?

You and a former classmate started a computer software company five years ago. Originally, the two of you were the owners and only employees. The foundation of your company was your combined expertise in creating custom-designed applications addressing the human resource needs of your clients. As your company grew, you added programmers, which now allows your business to provide a greater array of computer applications. You and your co-owner decide to raise capital by making a public offering of stock. In preparation for going public, you visit with several of your most valuable clients about investing in your company.

(1) What concerns should you have regarding these conversations?

(2) Is there anything about your expectations of the company’s future performance you must or must not share?

You and two partners operate a graphics design and printing company. The success of this business relates to the high-quality service and products you provide to your clients. To move to the next level requires a considerable financial investment in computer software and hardware. You and your partners are considering forming a corporation and offering to sell stock to the public. You anticipate raising at least $40 million in new capital. As you ponder these moves, you seek answers to the following questions:

(1) What requirements of the Sarbanes-Oxley Act will you have to meet?

(2) What is involved in offering a new company’s stock for sale to the public?

(3) Are there aspects of doing business as a publicly traded company that are different from operating as a partnership?