Getting Started – Number 1

Many of our individual and small business clients are put off by how much information we ask for.  Trust us, we’re not looking for more paper to sift through, we’ve just seen how what we don’t know can jump up and harm our clients.  Here are a few examples:

If your business is a separate entity, we want to know when and how it was formed, how it was acquired, who the owners, officers and directors are, whether formalities have been followed and whether restrictions exist on transferring ownership.  This information helps us analyze who can make decisions for the company, who else may have rights to protect (even if they can’t make decisions), and whether grounds might exist to hold owners responsible for company debts or other obligations.  Creditors often think about pursuing owners or parent companies if they don’t think they’ll be paid by the company.  We want to protect against such efforts, but that requires some initial analysis of how the company has operated.

We want to know all about the various loans a business has obtained.  When times are good, it may not seem important to fully understand what all that fine print says, but when trouble comes knocking on the door, you want to know which creditors have liens, what they have liens on, whether there is a personal guaranty and what constitutes a default.  Clients often learn that liens extend much deeper into a company’s assets then they first thought, that loans mature much sooner than expected, etc.  Coming up with strategies to deal with financial distress requires a clear grasp of the company’s financial landscape to avoid unpleasant surprises.

Stay tuned.  Next we’ll be talking about leases and tax returns.


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