Eric A Koester’s Answers

Eric A Koester

Washington Mergers / Acquisitions Attorney.

Contributor Level 10
  1. Converting LLC to C Corp prior to raising money.

    Answered almost 6 years ago.

    1. Eric A Koester
    2. Kenneth Allyn Sprang
    3. Knute Arthur Rife
    3 lawyer answers

    First, congrats on getting a term sheet from a VC. Times are tight out there, so just getting one in the door is a good accomplishment. Second, these basic terms you've mentioned are very common in a VC investment -- converting into a C-corp and putting 3-4 year vesting on the four founders. Nothing unusual from my experience. I've published a couple legal guides on Avvo that have some common term sheet terms we've seen on recent deals -- that could be a helpful guide as you negotiate the...

    5 people marked this answer as helpful

  2. Loan payback

    Answered about 6 years ago.

    1. Douglas Jay Lineberry
    2. Eric A Koester
    3. Sandra Palsky Greenblatt
    3 lawyer answers

    Investing in a startup is risky business -- even if you are making a loan versus taking equity in the company. Therefore, you should always consider your money at risk if you make an investment into a startup company. There is really no way to "guarantee" anything when it comes to a business that has a relatively low likelihood of becoming a big success. However, I think there are really two important things here to protect your investment. (1) Get to the front of the line. This means...

    1 lawyer agreed with this answer

  3. Capital losses

    Answered over 6 years ago.

    1. Eric A Koester
    1 lawyer answer

    If you have capital losses, you can offset your capital gains by those losses. The limits on deducting your capital losses come in when your losses exceed your gains. If you capital losses exceed your capital gains, you are able to deduct up to $3000 (or $1,500 if married filing separately). If your net capital loss is more than this limit, you can carry the loss forward to later years. I recommend using a software like TurboTax for your personal filings (if you are planning to prepare...

    1 lawyer agreed with this answer

  4. Merger / Aqusisition

    Answered over 6 years ago.

    1. Eric A Koester
    2. Markus May
    2 lawyer answers

    A merger usually brings with it some challenges. So if you decide to jump in, remember that there will be some challenges, likely some personality conflicts and maybe some attrition. But a well-done merger can also take your business to places you could never have gotten alone. I usually encourage a client to consider a merger or acquisition in two steps. The first step is deciding whether it makes business sense to merge. Once you've made that determination, the next step is to decide...

    1 lawyer agreed with this answer

    2 people marked this answer as helpful

  5. If I copywrite a business plan, will it offer the same as protection as a patent on the new product idea covered in the plan?

    Answered almost 6 years ago.

    1. Eric A Koester
    2. Clark AD Wilson
    3. Sadiq Aziz Ansari
    3 lawyer answers

    Unfortunately, a copyright won't protect your business idea -- it just protects the words themselves (such as prohibiting someone from copying a chapter of a book and claiming it is their own). And, you can't even patent the 'new product idea' in your business plan anyways. A patent requires you to "reduce the invention to practice," which means you can't get protection for just an idea. You have to actually make/build/create/design your product to get patent protection. For many people at a...

    3 people marked this answer as helpful

  6. Two friends are working on starting up a business. What is/are the best legal forms for the business?

    Answered almost 6 years ago.

    1. Eric A Koester
    1 lawyer answer

    This is a tough question to answer without more information -- so my first piece of advice is to talk to your lawyer and your accountant to get a better sense of what would make the most sense from a structural, accounting, and tax perspective. There isn't a one-sized-fits-all approach to the structure -- so it is worthwhile to take the time to give more details about your ultimate goals, how you plan to capitalize the business, and the likely financial performance of the business. Spend the...

    1 lawyer agreed with this answer

  7. Not For Profit Organization

    Answered almost 6 years ago.

    1. Gene Takagi
    2. Iram Khan Ansari
    3. Eric A Koester
    3 lawyer answers

    Hello Morgan, The process can be fairly difficult, but there are a number of useful resources online that can help you out. Below is a summary of the steps involved for forming a nonprofit in California, taken from the Citizens Media Law Project (link attached below). Walk through the steps below, including the additional details in the full post. Once you've gotten the California corporate entity formed, then you can work on getting 501(c)(3) status (link attached below). Usually...

    1 person marked this answer as helpful