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California Business, Insurance And Environmental Law Blog

How to craft an exit strategy

When investors in California and throughout the country put money into a tech company, they generally don't see any return on capital until the business is acquired or goes public. However, many tech companies wait so long to be purchased that they run out of money. Therefore, it can be difficult for many investors to see their money back after they part with it.

What many entrepreneurs choose to do is wait until an offer is made that meets their desired valuation for the entire company. In many cases, a prospective buyer is only interested in one aspect of the business, and that party will only make an offer that reflects the value of that one aspect. Entrepreneurs can take advantage of this by developing multiple sectors of their companies that can be sold as separate units. By taking this approach, it can be easier to get maximum value for each component, which may help bring maximum value to investors.

Common signs that a startup won't succeed

California entrepreneurs may not be surprised to know that startups fail 90 percent of the time. However, it can still be hard to recognize when a startup is failing and needs to be scrapped. One sign that a company doesn't have a bright future is that it doesn't know its customers. Specifically, the business doesn't understand what problem its target market has that needs to be solved.

Business owners who don't adapt to changing market conditions could be doomed to failure. While it may seem annoying to have to change a marketing or other strategy on a whim, the market is not going to change to accommodate a company. Therefore, the company must change to fit inside of its niche. Even if market conditions remain stable, it is still on a startup founder to execute an an idea in a timely manner.

What it means for two companies to merge

Companies of all sizes in California could potentially find themselves merging with other organizations. Examples of notable past mergers include Exxon and Mobile joining forces in 1999 and Disney and Pixar coming together as one organization in 2006. When the move is complete, one company remains intact while the shares of the other company are absorbed into the surviving business.

If a business is interested in merging, it must determine that doing so fits some sort of strategic goal. It should also take time to ensure that the culture of the organization will be protected if it is being absorbed into another company. These and other questions can be answered during the due diligence process. During this time, both companies will learn more about each other, including their overall financial and legal situations.

A guide to bad faith claims

Suffering from an injury is a burden, and having insurance that doesn't hold up its end of the agreement only makes that person's suffering worse. Insurance companies that operate in California have a duty to investigate and settle claims with their insureds fairly. Failure to do so is known as operating in bad faith. Thankfully, there are steps that can be taken to hold an insurer liable for acting in bad faith.

There are a variety of bad faith tactics that insurance companies will use. One common tactic is unreasonable delay. Insurance companies know that many insureds are relying on their settlement to meet basic needs. By dragging their feet, insurance companies hope an insured will eventually settle a lowball offer to get it all over with or simply drop the claim entirely. Some states give insurance companies up to 60 days to accept or deny a claim.

Target, Kroger in talks about a potential merger

California consumers may be interested in learning that Target and Kroger have reportedly been in talks over a potential merger for a number of months. Target, which is based in Minneapolis, is considering the merger as a means to boost its grocery offerings.

According to Fast Company magazine, the two retail giants have been in discussions since the summer of 2017. Together, the two companies have 4,600 stores and annual sales of $195 million. The value of the merger would be greater than $35 billion.

Justice Department challenges AT&T bid to acquire Time Warner

Many California residents use content and services provided by AT&T Inc. or Time Warner Inc. In addition to owning DirecTV, AT&T is the second largest wireless provider in the nation and has 25 million service subscribers. Time Warner owns HBO and CNN. AT&T has sought to buy Time Warner for $85 billion, but the Department of Justice has blocked the transaction after citing concerns that the AT&T would control too much of the wireless and television market. The Justice Department asserts that AT&T would raise prices for millions of consumers.

The lawsuit filed against AT&T by the Justice Department is heading to trial. The government had proposed settlements to avoid the trial, but AT&T rejected solutions that would have required it to sell DirecTV or Time Warner to sell Turner Broadcasting.

Mergers and acquisitions among pharmaceutical companies

For some California companies, mergers and acquisitions may be a key way for them to experience strong growth and increased profits. Within the pharmaceutical industry, these types of transactions are fairly common. There are some things that companies should do to make the success of their deals more likely.

Mergers and acquisitions can help to expand market access while increasing technological advances, but many end up failing. According to the University of Texas at Dallas's Naveen Jindal School of Management, between 70 and 80 percent of acquisitions within the pharmaceutical industry result in the destruction of value rather than its increase.

IP assets central to growth and acquisition of tech companies

The technology sector in California holds intellectual property assets with values that reach billions of dollars. Companies of all sizes should take a proactive approach to protecting and managing their copyrights, patents and trade secrets. During a merger or acquisition, the stakeholders' understanding of their rights could keep the process on track and avoid delays or disputes.

To focus on these vital assets, companies should develop employee agreements that build thorough protections. Both inbound and outbound licensing agreements require careful consideration as well. Companies might also benefit from crafting strategies for applying for patent protection. In some situations, maintaining an asset as a trade secret could provide more long-term protection than a patent.

Top tips for choosing the right business partner

Are you in the process of starting a business? Are you looking for a partner who shares your passion? Do you have concerns about choosing the wrong person?

Selecting the right business partner is one of the biggest decisions you will ever make in your professional life. If you get involved with the right person, he or she can help you reach your goals. Conversely, if you choose the wrong partner, it can work against you in many different ways.

AT&T drops bias charge in Time Warner deal

California residents may have heard about AT&T's intention to buy Time Warner. The deal is currently being held up by a Department of Justice lawsuit. While AT&T originally planned to claim that political bias motivated the DOJ's decision, the communications company announced on March 9 that it no longer plans to use that defense in court. Specifically, AT&T had alleged that the government was preventing the sale because Time Warner is the parent company of CNN.

Instead, the company is planning to focus on proving that the purchase will not raise prices or harm consumers. In October 2016, the head of the DOJ's antitrust division said that there were likely no issues from an antitrust perspective in this case. The decision to file a lawsuit occurred after he took the job in 2017.

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