Learn how to successfully sell your business!

Learn how to successfully sell your business using the advice of a corporate lawyer with $6+ billion in merger & acquisition experience.

This workshop breaks down the lessons that a business owner needs to learn to have a successful exit.  Each portion of the workshop is geared toward explaining in simple terms what an entrepreneur needs to know about finding buyers and getting to a deal.  The seminar will guide participants through challenging concepts like earnouts and indemnification in an easy-to-understand format.

Register here: https://www.eventbrite.com/e/successfully-selling-your-business-workshop-tickets-28265421637?ref=ebtnebtckt

Saturday, December 17, 2016
10:00 AM – 1:30 PM PST

Crowley Corporate Legal Strategy
15840 Ventura Boulevard, Suite 311
Encino, CA 91436



DATE CHANGE: Successfully Selling Your Business Workshop

We are excited about our upcoming workshop on Successfully Selling Your Business.

The date of our workshop has moved to Saturday December 17, 2016. The time  and location will remain the same.

For full event details and registration, visit: https://www.eventbrite.com/e/successfully-selling-your-business-workshop-tickets-28265421637?ref=ebtnebtckt


Winning - book cover2


Cooking Club at the Downtown Women’s Center

We had another fun adventure cooking at the Downtown Women’s Center last night. This time we made jambalaya, Cajun coleslaw and fruit salad for 120-140 women to eat the next day.

The Downtown Women’s Center provides living quarters, meals, training and counseling to women that are either homeless or in difficult straits.

Thank you to our friends, clients, and colleagues who volunteered with us – and a special shout out to everyone who helped with the (not-so-easy) rice cooking!




Dangers of drafting your own documents



In today’s DIY world, there are some things that should be left to the professionals.

We’ve compiled a top ten list of just some of the dangers you can run into when using templates or drafting your own documents. These are all things that we’ve actually seen in agreements.

  1. Using the wrong document. One classic issue is grabbing the first consulting agreement that shows up on the web, without realizing that it’s drafted to be one-sided in favor of the other party. 
  1. A 4-line agreement with no end-date or ability to terminate. Lasts longer than most marriages…
  1. The Frankenstein agreement. The drafter takes clauses from multiple documents and sews them together without realizing that some concepts are being covered two different ways by two different clauses.
  1. Undefined terms. Every other word in the agreement is uppercased, but not defined. 
  1. Fancy words.Malfeasance” and “devolve” – nobody knows what these mean. 
  1. Illegal clauses. Not all states will honor a non-competition clause imposed on a rank and file employee – California is one of them. 
  1. Integration clauses. The drafter includes an “entire agreement” clause . . . but it doesn’t reference its own schedules and exhibits! 
  1. Backdating deals. Rather than enter into an agreement on November 30, 2016 that is effective as of June 30, 2016, the drafter wants to pretend the contract existed before it was actually signed. Under the wrong circumstances, the drafter opens herself up to fraud claims. 
  1. Termination. Includes material breach as a way to terminate, but doesn’t say if the non-breaching party still gets paid from the party in breach. The non-breaching party gets injured twice. 
  1. Training. An agreement to provide training, without any details on the number of hours or for how many weeks the training will last.

Sometimes the pitfalls come in piecing together an agreement from multiple sources, grabbing a document you’ve used before and trying to repurpose it to a new situation, or downloading a “boilerplate” agreement from the internet for free. Whatever the method, it usually ends up costing you more to have your attorney fix your attempt at drafting than it would have been to have your attorney draft the documents from the get-go.

Stock appreciation rights: an alternative to stock options

A company that is able to make distributions to founders might not want to also make these distributions to employees, which would be required if employees ultimately become stockholders via a stock option plan. This is where Stock Appreciation Rights (“SARs”) can be useful, as an alternative to stock options. SARs essentially give employees a lottery ticket – if the company is sold, the SARs employees have the right to participate in receiving some of the sales proceeds. A SAR, or “phantom stock”, is the right to receive money on the sale of a company, not a right to receive stock of the company.

How does this work?

When a SAR is granted, there is an initial SAR price as of the date of the grant. This initial price can be determined several different ways, but we recommend using a 409A valuation.

A 409A valuation is generally used when implementing a stock option plan and is a good, independent way to figure out the value of a SAR, as well. A 409A valuation is prepared by a third-party company (a valuation firm) based on several factors, including the current and historical financials of the company, an industry analysis, and a check on the company’s competitors. The valuation firm then determines the fair market value of the stock, which can be used by the company under the 409A safe harbor rule for 1 calendar year – or until there is a material change in the company that would affect the fair market value of the stock, at which point a new 409A valuation would need to be completed.

Once the initial value is set, the company can grant SARs to employees, independent contractors, or advisors to give them the right to receive a monetary payout of the increase in value per SAR at a given time or upon a pre-defined trigger event (generally a sale of the company).

Example:  Let’s say Company A grants 10,000 SARs to Employee 1. On the date of grant, the SARs are worth $0.10 each based on the 409A valuation. Per the SAR Agreement, the company chose not to have any vesting in this SAR grant, so all 10,000 SARs are immediately available to Employee 1, but the SAR says that it can only be exercised upon the sale of the company – the defined trigger event. When the company is sold 3 years later, the SARs are now worth $1.10 each and Employee 1 has the right to receive the $1.00 increase per SAR, for a total of $10,000!

As you can see from the example above, the great benefit of granting SARs is that they are very flexible. The company can choose to have SARs subject to a vesting schedule, just like a stock option, so only the vested SARs at the trigger event date are counted. The company can define a time period or trigger event for when the payout to the employee will occur. And employees also don’t have to pay for anything when exercising the SAR, like they do when exercising their right to buy stock under a stock option plan.

The ultimate benefit of issuing a SAR is that the company can give employees a monetary incentive, without issuing any of the company’s stock.

With any major business decision, it’s important to consider the legal and tax implications. Contact your accountant to discuss the tax implications of SARs for your company and let us know if you need any help with the legal matters related to your equity incentive plan.

CLIENT BULLETIN: USPTO plans Trademark application fee increases

Trademark application fee increases scheduled for January 14, 2017

As 2017 is fast approaching, we wanted to make sure you are aware that the United States Patent and Trademark Office (USPTO) is increasing some of their fees in 2017.

Effective January 14, 2017, the fee for a trademark application using the online TEAS Regular application will increase to $400 per-class of goods/services (a $75 increase).

It also looks like the USPTO is trying to dissuade people from using paper filings – as those costs are significantly increasing across the board – the fee to file a paper application is increasing by $225 to $600 per-class!

The good news, however, is that if you are requesting an extension of time to file a statement of use with regards to a trademark application, the per-class fee for electronic filings is being reduced by $25 to $125.

We generally try to use the TEAS Reduced Fee (TEAS RF) application whenever possible to submit trademark applications for our clients. The USPTO fee for a TEAS RF application will remain at $275 per- class.

As a reminder, the TEAS RF requirements are:

  • Provide a valid e-mail address
  • Authorize the USPTO to send e-mail correspondence concerning the application
  • Agree to use the Trademark Electronic Application System when filing any relevant application-related submissions.

Failure to comply with these requirements will incur an additional processing fee of $50 per class.

Contact us for more information on the trademark application process and to find out more about our fees for this service!

For the full list of USPTO price increases, visit: