Navigating Business Transactions
in West Virginia

Entrepreneurs in West Virginia conduct various business transactions each year that vary in scale and type. Even the smallest businesses encounter complex issues that may benefit from professional guidance. Research can provide a foundation of knowledge upon which to build, allowing entrepreneurs of all types to approach business transactions with greater confidence and efficiency. In terms of executing these transactions, however, it may be appropriate to consult with a West Virginia business attorney at Zeni Law to gain a more detailed perspective on the factors that apply to your situation.

Mergers and Acquisitions: A Brief Overview

Mergers and acquisitions occur when two businesses come together. When two firms merge, they create a new enterprise with a certain level of equality and mutual respect. On the other hand, an acquisition typically involves the consumption of a smaller business by a larger, more powerful enterprise. Acquisitions may occur in a friendly manner or take the form of aggressive, “hostile takeovers.” 

There are various legal considerations when it comes to mergers and acquisitions in West Virginia:

  • In an acquisition, accurate valuations are crucial
  • Company representatives must file the appropriate forms with the West Virginia Secretary of State
  • Mergers require merger documents
  • The purchase of a franchise involves additional steps, such as registering trade names

Types of Business Contracts in West Virginia

Business contracts lay the groundwork for reliable relationships between companies in West Virginia. Contracts ensure that both parties understand their various responsibilities and rights. In addition, business contracts usually outline the consequences that may be applied when either party fails to carry out its responsibilities. 

Common examples of business contracts include:

  • Non-disclosure agreements
  • Leases
  • Franchise agreements
  • Employment contracts
  • Contracts for independent contractors
  • Non-compete agreements
  • Partnership agreements
  • Requests for proposal
  • Vendor service agreements
  • License agreements
  • Indemnity agreements

There are many other types of business contracts. Companies can customize these agreements to meet their unique needs. To ensure enforceability, however, companies may wish to enlist the help of business lawyers in West Virginia when drafting their contracts. 

What Are Equity Agreements in West Virginia?

A typical business contract in West Virginia is an equity agreement. This type of agreement provides investors with equity in a company – usually in the form of shares. In exchange, the investor offers something of value to the company. Often, this is startup capital that helps the company start its operations. On the other hand, employees may sometimes sign equity agreements – agreeing to sacrifice some or all of their paycheck in exchange for shares in the company. Due to the high stakes of equity agreements’ legal enforceability, even West Virginia businesses that do not need to maintain in-house counsel will very commonly work with an outside attorney to draft or review these documents, particularly if the company expects to use the same contract terms with many investors or employees.

Due Diligence: An Important Step

Due diligence is not a business transaction in and of itself but a crucial step that companies must take before executing any high-stakes deal. For example, a company might gather as much financial data as possible about a smaller business as they approach a potential acquisition. During this due diligence process, representatives of the potential buyer must determine whether the smaller company is profitable, gauge whether it has excessive debt, and endeavor to ascertain whether it may be hiding anything cautionary from the potential investors. Due diligence helps companies avoid the negative consequences of poorly researched deals, whether they involve acquisitions, license agreements, equity agreements, real estate transactions, etc. 

Shareholder Rights

Shareholders own a stake in their respective companies and have rights associated with this ownership status. That being said, different shareholders may have different sets of rights. A company may create different “classes” of shares that distinguish certain shareholders from others. Shareholder rights might include:

  • Voting rights
  • Dividend rights
  • The right to receive assets in the event of a bankruptcy
  • The right to sue the company alongside other shareholders in a class-action lawsuit

By creating different share classes, companies maintain more significant levels of control – even when there are hundreds of thousands of shareholders. Share classes allow large numbers of “common shareholders” to invest in and profit from the company while ensuring that day-to-day business operations remain in the hands of experienced leaders within the company hierarchy. 

How Joint Ventures Work in West Virginia

In contrast to a merger, in a joint venture, companies pool their resources temporarily to complete a specific project or pursue a common goal. Companies may formalize these relationships with a joint venture agreement clarifying the responsibilities and rights of each party. Such contracts are often drafted with assistance from West Virginia business lawyers.

Transfer on Death Designations and Buy-Sell Agreements​

As the name suggests, a transfer-on-death designation (TOD) transfers ownership of the assets subject to the designation (often a deed to real property or the contents of a banking account) to the named beneficiaries at the moment of the (prior) owner’s passing, although in practical terms gaining access to the assets will often require the beneficiaries to present some form of documentation, such as a death certificate, and proof of identity. Transfer-on-death designations have the advantage of completely bypassing the often time-consuming probate process. 

A buy-sell agreement has specific applications for business, as it provides a clear plan on how to deal with the ownership stake of an individual upon their passing. Similar to a transfer-on-death designation, a buy-sell agreement among business partners typically establishes a provision whereby the death of any owner automatically triggers the transfer of their shares in the business to the remaining owners. Common in partnership business structures, these provisions in buy-sell agreements ensure that none of the co-owners will be able to sell or transfer their shares to outside parties. Buy-sell agreements can also prevent a business partner’s shares from being counted among the assets in their probate estate.

Trademark, Patent, and Intellectual Property Laws

Sometimes, a company’s most valuable assets are not physical objects but abstract concepts such as ideas, designs, music, etc. Companies can protect this intellectual property with trademarks and patents secured under West Virginia and federal legislation. On a national scale, the United States Patent and Trademark Office grants and protects patents and trademarks nationwide. 

At the state level, businesses in West Virginia can benefit from the protections and relief provisions of the Uniform Trade Secrets Act to protect their intellectual property. Business lawyers in West Virginia can help companies prevent overly broad employee revelations of proprietary information with non-disclosure agreements, non-compete agreements, and similar protections. Because no prevention method is foolproof, a West Virginia business attorney may also help a business at risk from exposure (deliberate or accidental) of its trade secrets seek prompt injunctive relief. 

How the Uniform Commercial Code Affects West Virginia Businesses

The Uniform Commercial Code (UCC) provides the framework for all business contracts across the United States. Its universal nature helps to ensure mutual understanding between businesses, even if they are located in different states. When a company from West Virginia enters into an agreement or transaction with an out-of-state party, the UCC ensures everyone is on the same page.

Consult with a Business Lawyer Today

Each business in West Virginia is slightly different, approaching various transactions with unique priorities. An experienced West Virginian business attorney can cater to these priorities, guiding entrepreneurs toward optimal outcomes based on their specific goals. To learn more about each transaction discussed in this article, consider contacting Zeni Law. With targeted guidance, West Virginia businesses can approach and execute various transactions streamlined and effectively.