Businesses succeed for many reasons; one of which is by forming beneficial relationships with other owners. When business owners want to form a business relationship, Equity and Non-Equity Strategic Alliance Agreements, Partnership Agreements, and Joint Venture Agreements are available options.
Business owners typically turn to attorneys for guidance when creating these business relationships. Quite often though, they request attorneys to create an agreement and specify a particular one to commemorate the relationship. The attorney complies, and the finalized product is handed over to the business owner, but complete compliance might have its downsides. The potential issue here is that there could be a more suitable agreement for the business owner that they are unaware of.
To paint a picture, small business owners usually have a greater familiarity with Partnership Agreements, while larger enterprises often lean towards Joint Venture Agreements. Therefore, a small business owner may go to an attorney and ask for a Partnership Agreement to be drafted and negotiated. The small business owner may have chosen this agreement due to familiarity and possibly with some guidance from a web source. The attorney chosen will then draft and negotiate the Partnership Agreement without asking the small business owner any questions besides the questions relevant to completing the agreement. The small business owner is most likely satisfied that this agreement is complete.
However, the business owner may not have been advised on the implications of the Partnership Agreement because the attorney was hired to draft and negotiate the specific agreement and may have assumed that the business owner already knows and understands the implications of the agreement. Such implications include forming a new entity, the tax liability associated, as well as the shared legal risk.
In this scenario, the Non-Equity Strategic Alliance Agreement might have been a more suitable option by allowing the small business owner to establish the business relationship without the requirement to register as a new entity, relinquish ownership, add additional tax liabilities, and it may help to minimize legal risks.
Business owners must also keep in mind, and may not always be advised as to, the relevant antitrust laws when creating these relationships. These laws primarily aim to prevent companies from engaging in "market fixing" or "price fixing.” Small business owners in Arizona aren’t typically seeking out ventures for these purposes but the antitrust laws still need be analyzed to make sure there are no violations. Due to the complexity of understanding which agreement may be best for your business while ensuring compliance with antitrust laws, finding the right business law attorney in Arizona is important.
Bahme Law is unlike other business law firms that just comply. At Bahme Law, we prioritize understanding the goals, requirements, and purpose behind the requested agreement from business owners. This commitment enables our firm to help determine the best suited agreements or options that could be more beneficial for YOUR business’ needs.
If you have a venture that you want to pursue and want to choose the best option for your business’ needs, reach out to Bahme Law today!