Apple “Imports” Processors from Austin factory

Posted on December 24, 2011 by admin

Once again, the City of Austin has shown that it is a major player in the tech world. Apple Inc now receives vital iPad and iPhone components from a factory right here in Austin – further illustrating what countless companies already know, Austin is one of the best places start or transact business.

Texas Tech Businesses

Apple has historically used manufacturers located in Asia as its source for components, but Reuters recently reported that a 1.6 million square foot factory in Austin now makes their A5 processor – which is a critical component in the popular iPad 2 and iPhone 4S.

The massive factory, owned by the Korean company Samsung Electronics, is dedicated to manufacturing the Apple chips, according to a Reuters’ source familiar with the operation. Reaching full production in early December, the $3.6 billion production line now manufactures the A5 processor.

In a statement to Reuters, a Samsung spokesman said the company has added 1,100 jobs to support their new production line. The spokesman added that the remainder of Samsung’s total 2,400 workers in Austin produces NAND flash memory in another nearby factory.

In total, Samsung has invested about $9 billion in their businesses in Texas according to the Austin Chamber of Commerce. However, Samsung is not alone as Austin is a popular destination for both new business start-ups and relocated businesses. Many tech companies are attracted to Austin because of an ample supply of educated tech employees from the University of Texas, as well as cheaper real estate and lower taxes – making Austin one of the hottest places in the nation for job growth.

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Austin Listed in Top Five Markets to Watch

Posted on November 28, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin, Texas came in second on Price Waterhouse Cooper’s annual ranking of markets to watch in 2012. Washington, D.C. finished in first, with San Francisco, New York City and Boston taking the remaining top five spots.

The report found that Austin has a perfect mix of features necessary to address the realities of the 21st century real estate market and business environment. For example, because the city features such diverse career opportunities – in education, government, medical and high-tech fields – it is insulated from the boom-bust cycles that have plagued other cities. Further, the academic environment buoyed by the University of Texas supports emerging tech companies and helps attract energetic young talent.

The rankings also noted that Austin is an eminently livable city with high quality-of-life measures. Specifically, it noted the city’s 24-hour core and abundance of nightlife options – and cited favorably Austin’s pedestrian-friendly layout and apartment-based neighborhoods.

Starting a Business?

The rankings illustrate what Texans have known for years – Austin is a great place to start a new business. However, starting a business is a challenging endeavor, even in a friendly environment. New business owners would do well to enlist the help of an experienced Austin business transactions lawyer.

An experienced attorney can help with all aspects of business formation, from choosing what form to take – partnership, LLC or even S corporation – to franchise agreements, real estate negotiations and asset purchases. Attorneys can also help with tax compliance and contract disputes.

These issues are too complicated, and too important, for most businesses to handle on their own. Starting a business certainly requires some risk-taking, but owners shouldn’t gamble on their futures by trying to do their business transactions by themselves.

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Banks Vow to Lend More to Small Businesses

Posted on October 21, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

There have been many explanations given as to why the American economy is mired in a prolonged recession. One of the factors often cited as contributing to the length of the economic situation is that banks have tightened lending restrictions and are less willing to lend money to small businesses. Several large banks, many with ties to the Austin area, are vowing to address this factor.

Karen Mills, head of the Small Business Administration, announced in late September that 13 banks have agreed to increase amounts lent to small business over the next three years by $20 billion. This is welcomed news for small businesses that are looking to expand operations or hire more workers and entrepreneurs looking to start new businesses in Texas.

“We know that many small businesses, particularly in traditional underserved communities still face challenges in accessing the capital they need,” stated Mills. “[The commitment to lend] will provide billions of capital to help small businesses all across the country grow and create jobs.”

The 13 banks vowing to increase lending, some of which have locations in the Austin area, include: Wells Fargo, Bank of America, JP Morgan Chase, Citigroup, KeyBank, TD Bank, US Bank, PNC Bank, Regions Bank, M&T Bank, SunTrust Bank, Citizens Financial Group and Huntington Bank.

Small business owners, especially entrepreneurs trying to start a new business venture, should contact an attorney to discuss the business startup process. The process of starting a new business can be complex, and an attorney experienced in helping small business owners can help you start your business on the right foot.

Source: Banks Offer $20B in Help to Small Business

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Temple-Inland Purchased Despite $1 Billion Lawsuit Pending Against It

Posted on September 30, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Litigation

Austin-based Temple-Inland Inc. has agreed to be purchased by International Paper Co. for $4.3 billion. The sale of $32 per share follows a rejected offer in June of $30.60 per share by International Paper. Some believed a recent lawsuit regarding Temple-Inlands role in the 2009 failure of Guaranty Bank would have scared away International Paper, but, evidently, it did not.

Pending Lawsuit

The lawsuit recently filed by the liquidation trustee for GFGI Liquidation Trust against Temple-Inland in the Northern District of Texas alleges more than $1 billion in damages. The suit accuses Temple-Inland, which owned Guaranty Bank from the 1980s until 2007, of intentionally burdening Guaranty Bank with risky securities and further injuring the bank by illegally extracting hundreds of millions in dividends, and then spinning off Guaranty Bank as its own corporation destined for certain failure.

The lawsuit further alleges that directors of Guaranty Financial Group breached their fiduciary duties when they repeatedly approved the dividend payments to Temple-Inland, even though Guaranty Bank needed the capital.

Fiduciary Duties Owed by Directors

One of the fiduciary duties allegedly violated by GFG directors was the duty of loyalty. Under Texas law, corporate directors owe a duty of loyalty to the corporation to act in the corporation’s best interest. This duty of loyalty commands a director to act in good faith and to not allow their personal interests to come before the interests of the corporation. A director is considered “interested,” and thus potential violating their duty of loyalty, when they do any of the following:

  • They make a personal profit from a transaction directly with the corporation or steal a corporate opportunity
  • They buy or sell assets of the corporation
  • They transact business in their director capacity with another corporation in which they are also a director or are significantly financially involved with
  • They transact corporate business in their official director capacity with a family member

Filing a suit against corporations for fraud can be a complex and difficult process, with claims against officers and directors adding even additional pleading hurdles. It is best to know the law and consult with a knowledgeable attorney before attempting a lawsuit against a corporate entity.

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Austin Business Owners Should Take Steps to Prevent Business Fraud

Posted on September 27, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

While sophisticated financial scams involving amorphous cyber-attack groups have stolen the headlines for the past decade, Austin small business owners should be aware that the most likely source of business fraud and losses is actually employees. A recent article from Smart Business citing the Association of Certified Fraud Examiners reports that four out of five internal fraud cases occur in small businesses.

Employee fraud and theft is one of the fastest growing crimes in the U.S., according to the FBI. In fact, the U.S. Chamber of Commerce estimates that 75 percent of all employees steal at least one time, and half of those will steal again. Moreover, in the United States 20 percent of every dollar earned is lost to employee fraud and theft, according to estimates by the American Society of Employees.

Business Owners Must Look For Signs of Fraud in Employees

In a press release from the Association of Certified Fraud Examiners, the ACFE profiled the persons most likely to commit fraud in a small business. Even if a small business owner does not suspect fraud, he or she should be on the lookout for these signs:

  • Employees who are most likely to commit fraud include accountants, sales persons, managers, customer service representatives, employees in operations or buyers
  • Employees who commit fraud are more likely to be in their thirties or early forties
  • Employees who commit fraud might have an unusually lavish lifestyle or difficulties meeting financial obligations
  • Employees who commit fraud generally do not have previous fraud convictions or financial crimes charges

Steps to Prevent Fraud: Oversight, Control of Bank Accounts, Random Audits

Smart Business advises Texas small business owners to take proactive steps to prevent fraud. Small business owners should complete criminal background checks on potential employees as a condition of a job offer. Even though most fraud is committed by people without criminal records, this step is still helpful to prevent hiring a repeat fraudster.

The business owner should not turn over complete control of the books to one employee and should have internal checks and balances in place so that coworkers can easily report suspicious activity, too. Finally, business owners should hire a financial auditor or CPA to conduct random, unscheduled audits at least once a quarter.

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Local Startup Secures Funding for Technology Designed to Help Retailers

Posted on September 16, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin-based startup NewComLink – which was founded in 2008 by Suneet Paul and Jim White, formerly of Dell Financial Services – recently announced that it has secured $10 million in venture capital financing. This funding will help the company introduce technology designed to change the way businesses handle consumer credit – namely by giving shoppers more credit options as they are in the check-out line.

“Retailers lose tens of billions of dollars each year because they tell customers ‘no,’ instead of offering them other options,” Paul told The Statesman. “We want to make sure that no customer walks away without some form of purchase.”

Like several other technology companies in Austin, such as Freescale Semiconductor and Tivoli, NewComLink received part of its funding from Austin Ventures. NewComLink also received capital from StarVest Partners.

Funding Options for Startup Businesses

Any entrepreneur can attest to the fact that starting a business doesn’t come cheap. In many cases, the funding for a startups come from business owners themselves – who dip into their own savings, use credit cards or get home equity loans to make their business dreams come true. In other cases, these entrepreneurs get funding from their friends and families, bank loans, business grants or from people known as angels – that is, individuals with a high-net worth who believe in what the business owner is trying to accomplish.

In other cases, entrepreneurs are able to obtain venture capital for their startup businesses – although companies first starting out are generally unable to get this type of funding. In order to be considered for venture capital, business owners must provide potential investors with a business plan that includes information on the potential customers and earnings of the venture.

When entrepreneurs are able to secure venture capital for their startups, they must be careful about the terms of the agreement – which may require that they pay a percentage of their profits. In order to ensure the best terms in an agreement, an entrepreneur should consult a qualified business attorney – who can advise the business owners of the law and negotiate the best terms in a venture capital arrangement.

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Borders Out of Business — What Happens When a Business Closes?

Posted on September 9, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Bought any good books lately? With the closure of all three Borders stores in Austin, Texas, earlier this year and the final liquidation of the entire chain expected to be complete by the end of September, readers have fewer brick-and-mortar bookstore shelves to browse.

“Closed for Business” a Sign of the Times

The demise of the 40-year-old bookselling retailer follows a nationwide trend in this tough economy. The most recent statistics from the Department of Labor show the number of businesses closing their doors exceeds the number of new businesses starting up over the past three years. And while winding down operations can present unique challenges for a large chain like Borders – which once boasted over 1,000 locations – there is a long checklist of issues that businesses of any size must run through before closing for good.

Legal Issues to Consider During Texas Dissolution

In general when dissolving an entity, Texas business owners must:

  • File a dissolution document and pay a filing fee
  • File various federal, state, county and city tax documents
  • Cancel tax identification numbers, registrations, permits, licenses and business names
  • Notify and pay employees, creditors, suppliers, vendors and contractors
  • Close bank accounts

Other specific legalities will apply depending on how your business entity was structured (corporation, LLC, partnership or sole proprietor). There are filing and notification deadlines, along with consequences for missing them or for filing the wrong form.

Your business’s own governing documents may contain various “winding down” requirements and obligations that may need interpretation in light of ever-changing federal, state and local laws and regulations.

What About Business Property and Contracts?

Many businesses will benefit from an evaluation of assets and property – physical and intellectual – owned, leased or licensed by the company or to others. Contracts of all types will need to be reviewed and, perhaps, renegotiated. You also may benefit from outside legal help if business assets need to be distributed to partners, co-owners, or company officers.

No matter how large or small your business is and no matter why it’s closing, an experienced Austin business attorney holding a CPA can work with you to make sure you follow the right steps once you’ve made the decision to shut down.

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Construction Employment on the Rise in Metropolitan Areas, Study Finds

Posted on September 6, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Litigation

According to a recent report by the Associated General Contractors of America, hiring for construction workers increased in 149 metropolitan areas in the last year. Among the locations that are seeing growth are the Austin, Dallas, Houston, Chicago and Cincinnati metropolitan areas.

On the other hand, the report also notes that some metropolitan areas are experiencing huge losses in construction jobs – such as the layoffs taking place in the Los Angeles, Las Vegas, Philadelphia and New York City areas.

According to Ken Simonson, the Chief Economist at the Associated General Contractors of America, the disparity in hiring can be attributed to different building trends in the private and public sectors.

“A lot of metro areas appear to be benefiting from growing demand from the private sector for new construction,” he told the Construction Magazine Network. “Declining public sector demand is clearly taking a toll on just as many metro areas, however.”

Construction Disputes

Although the growth in metropolitan areas is good news for the construction industry, it can also cause construction disputes among stakeholders such as contractors, subcontractors and investors. The most common reasons for legal disputes in the construction industry include:

  • delays with a project
  • work interruptions during a project
  • contracts that have not been drafted properly
  • defective materials
  • conflicts between contractors and subcontractors
  • changing the scope of the work after a project has begun
  • environmental problems
  • payment issues

If you are involved in a construction dispute, you don’t have to navigate the legal issues alone. By contacting an experienced construction litigation attorney, you can be advised of your rights and given the assistance you need with any court case that arises from the dispute.

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Reorganization Helps Austin Businesses Stay Afloat

Posted on August 31, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Running a successful business can be challenging in any economy and the pressure only increases when times are tough. With the modest pace of the nation’s recovery from the current economic crisis, more and more businesses in Austin, and across the country, are feeling the crunch.

Many Austin businesses facing financial difficulties are finding that they need to reorganize in order to restore or improve their financial viability. Freescale Semiconductor is one of these companies.

After its recent reorganization, Freescale dramatically reduced its net losses from $538 million in the second quarter last year to just $168 million during the same period this year. This translates to a drop in net losses from $2.73 per share to 79 cents per share. Over the same time period, Freescale’s gross profit margin increased by nearly five percentage points, and it reported net operating earnings of $31 million, compared to a previous operating loss of $18 million.

As demonstrated by Freescale, reorganization can make the difference between survival and defeat for a business facing difficult economic times. Through reorganization, a business can cut its costs without doing further damage to the business. In some cases, reorganization may be limited to “trimming the fat,” while in others, it may involve more complicated transactions such as dividing a business into separate legal entities.

Because restructuring or reorganizing a business incorrectly can be highly counterproductive, it is essential to have a detailed and carefully crafted reorganization plan that is responsive to your company’s specific needs and circumstances.

If you are business owner in the Austin area and are thinking of reorganizing, an experienced business attorney with a CPA can help you explore your options and determine which path can best serve your long-term business goals.

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Austin Tech Startup Companies often Face Complex Business Issues

Posted on June 17, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin tech startup Gazzang Inc. has been quite busy lately. The tech company, specializing in cloud security software, continues its aggressive productivity that began in 2010. Gazzang was established in 2008, but moved from Houston to Austin last year to take advantage of the fertile market of tech-savvy executives. The move also benefitted the startup financially, as Gazzang was able to raise $3.5 million from venture capital investments.

Gazzang is just one of hundreds of startup tech business in Travis County that is experiencing rapid growth. As we’ve discussed earlier, while most of the country is still suffering through the lagging effects of the recession, Austin continues to be a friendly place for technology startups to grow. Austin investors continue to reward promising young companies that make sound business decisions.

However, a successful venture needs more than a good idea and talent to make it happen, as unsound business decisions can quickly cause a company to fail. Complex business startups face a dizzying array of decisions that can have profound and long-lasting effects on the entity. Just a few of these business issues include:

  • Choosing the proper business entity: crucial choices on whether to form a LLC, S-Corporation or Limited Partnership.
  • The legal aspects of venture capital investments.
  • Financing: whether money should be obtained through a lender or a private investor and how the agreement should be structured.
  • Covenants not to compete: bringing in key personnel and executives from other businesses in the area may potentially infringe a non-compete agreement.
  • Real estate and lease agreements: many businesses have been doomed by terms of an unfavorable lease.

These are just a few of the tough decisions that new businesses face. An experienced Austin business attorney can be an invaluable asset to any company, especially one just starting up. Contact a Travis County business lawyer to discuss what choices are most appropriate for your entity.

Source: Austin Business Journal, “Former Phurnace VP joins Austin cloud security startup” June 16, 2011.

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