Big Firm Experience With Small Firm Benefits

Common pitfalls while raising venture capital

Venture capital is a powerful tool for a startup hoping to expand, providing the leg-up to even climb onto the growth ladder. It is a complex process, however, governed by SEC rules and lined with pitfalls that can rob founders in the long run. It is imperative that you seek experienced legal guidance through each step of the process of raising capital.

Here are just a few of the common issues that cause startups to make critical errors in the venture capital stage:

Reaching out to investors – The SEC has established strict rules against advertising or soliciting venture capital. Do not publicize, advertise or put content on your website about seeking capital. You should not reach out over social media, unless there has a pre existing relationship has been established. A lawyer can help you seek out qualified capital.

SEC Rule 506 – You cannot sell securities to non accredited investors. Your investors must pass certain checks and criteria, which an attorney can help you understand. This protects the startup from a myriad of compliance and regulatory issues.

Work through a registered broker – There are a wide range of variables that can make a finder unqualified to broker the deal, including certain types of commissions and compensation.

Due diligence – It is critical that you thoroughly investigate any potential investors, doing your homework and determine motivation, net worth, end-game and other dynamics that could adversely affect the relationship you are about to establish with your investor.

Issuing equity – It is not always in the startup’s best interest to issue preferred stock, unless the firm is raising a significant amount of capital. Seek guidance regarding options for other types of equity or value that you can issue that will protect you from dilution later.

Raising capital is an incredibly complex process with countless opportunities for mistakes. Seek out prudent guidance and wisdom from a firm that has led other companies successfully through the VC process. Adam Pugh serves startups throughout Austin, Texas and has the experience to protect your firm from devastating errors while raising capital.

Is Your Business Protected from Employment-Related Liabilities?

Texas is doing fairly well these days in terms of small business growth, currently ranking fourth in the nation for jobs added by small businesses — in this case, those with fewer than 50 employees.

In fact, Austin was recently recognized as having the fastest-growing economy among large cities, while Round Rock ranked in the top 10 for economic growth among cities of any size. These rankings are largely due to employment numbers.

Growth of business operations typically brings with it a need for more employees, as well as the need for careful planning of contracts, employee relations and management.

Poor management of human resources creates liabilities for employers, and companies need sound legal strategies to avoid unnecessary complications that divert time and assets away from growing the business.

In addition to the creation of enforceable employment contracts, your business may need to cover a variety of other legal bases related to employment, including:

  • Employee confidentiality agreements
  • Promotion policies
  • Non-compete agreements
  • Employment manuals that establish the guidelines of the work environment
  • Procedures for disciplinary action
  • Employee entry and exit procedures, including termination procedures and employee testing

Texas businesses can guard against employment-related liabilities by taking action now.

While there is always a certain level of risk with a new hire, employers can protect their interests now and in the future with careful employment planning.

Slater Pugh, Ltd. LLP, provides contract and employment-related services to businesses in Austin and the surrounding areas. To learn more, please see our employment law overview.

Considering a Merger in Texas? Cover Your Legal Bases.

While mergers are common in business, every deal has its legal nuances and complexities, and even minor mistakes can have long-term and costly effects. In addition to the legal agreements between the merging entities, the new or restructured corporation typically must create new or updated contracts, procedures and corporate bylaws.

Slater Pugh, Ltd. LLP, provides all of these legal services to merging and newly forming entities. Our firm assists Texas companies in:

  • Creating or amending corporate bylaws
  • Creating co-owner contracts
  • Outlining shareholder relationships and negotiations
  • Creating contracts that determine payment distribution
  • Negotiating any severance pay issues

Merger Filing Requirements

A certificate of merger must be filed with the Texas Office of the Secretary of State if any of the filing entities is a domestic entity, or if the purpose of the merger is to create a domestic entity.

Merger filings in Texas typically include a plan of merger, plus any additional attachments required by the Texas Business Organization Code. For example, Texas entities created through a merger must provide additional statements regarding any amendments or changes to a certificate of formation, which must be attached to the merger filing.

As an alternative to filing a complete plan of merger, the merging parties may choose to complete and certify specific statements in the Alternative Statements section of the required form.

The Secretary of State notes two of the most common reasons for the rejection of mergers:

  • Failure to include appropriate additional statements
  • Failure to obtain the correct certificate of account status from the comptroller

It goes without saying that any business owner or organization considering a merger should have experienced legal counsel every step of the way, whether you’re filing the required forms, creating new contracts or updating your bylaws.

For more on these matters, please see our overview of business and corporate law.

Austin Ranked as Top City for Young Entrepreneurs

In 2015 one study ranked Austin as having the fastest-growing economy among large cities. The factors considered in the rankings included population growth and decreases in unemployment rates, among others. In fact, of cities of any size, Round Rock also came in the top 10 in terms of economic growth.

Now a separate study conducted by NerdWallet has looked at 181 metropolitan areas in the U.S. to determine which cities are the friendliest to young entrepreneurs, and Austin again ranked at the top.

Depending on the type and scope of your plan, locating small-business financing can be difficult, but Austin came in fifth nationwide for U.S. Small Business Administration loans.

Per 100,000 residents, new businesses in Austin received nearly $18 million in SBA loans. These loans can be used to start, acquire or expand a small business. SBA also provides loans for assets such as buildings and land, as well as microloans for startups, disaster assistance loans, and loans for exporting working capital.

If you’re thinking of starting or expanding a business in Austin, then it’s wise to speak with an experienced business attorney about your financing options. A lawyer can help you select an appropriate loan structure and minimize the risk.

Analysts also looked at Austin’s local business environment, including the education level of the population and how cost of living affects the operating cost of a business.

Austin’s cost of living was found to be lower than the national average, and a lower cost of living, coupled with lower office and workspace costs, can be a boon to new businesses. In fact, Midland, Texas, was also in the top 10 in this area.

For entrepreneurs and startups, it’s crucial to get it right the first time around. 

A multitude of factors have to be considered when starting a new business. You have to be smart about the kind of entity you choose to create, and you have to make the right choices with regard to financing and capital development.

You’ll also need detailed, enforceable contracts that are specific to your business, and you’ll need to cover your bases with regard to intellectual property. And it’s a good idea to get a professional to assess the long-term risk of your business plan.

For more on these matters, please see Slater Pugh Ltd. LLP’s overview of representation for entrepreneurs and startups.

What Are the Essential Elements of a Texas Business Contract?

With Austin and other parts of Texas currently enjoying a growth-friendly business climate, the need for well-written, comprehensive contracts is on the rise. An ambiguous or poorly drafted contract could prove disastrous for a company.

If you are thinking of signing any sort of business agreement, then it’s a good idea to first get some feedback from a contract lawyer. With that in mind, let’s consider the basic legal elements of a contract.

Under Texas law, a binding contract typically consists of six essential elements:

  • Offer and acceptance
  • A legal purpose for the contract
  • Mutual assent
  • Sufficiently defined terms
  • “Consideration”
  • Competent, authorized parties to the contract

Offer and Acceptance

A contractual offer must be based on someone’s willingness to enter into a bargain, and the other party’s acceptance of the offer must not alter the offer’s terms. If acceptance changes the terms of the offer, then the offer has been rejected, or a change in the contract constitutes a counteroffer.

Legal Purpose

A contract can be legally binding only if its purpose is legal. You could not, for example, enforce a contract whose purpose is to bargain for illegal drugs or weapons.

Mutual Assent

For a contract to be enforceable, both parties must express mutual approval of the terms. This essential aspect of a contract is also sometimes called the “meeting of the minds.” Mutual assent means that both parties understand and agree to the terms of the contract. Determining mutual assent is based on what the parties said and did, not on their subjective intent.

In other words, the meeting of the minds is most effectively established in writing.

Sufficiently Defined Terms

A contract is not legally binding unless its terms are clearly defined, and courts are not able to create contracts where none exist. Keep in mind, too, that an ambiguous contract may have unforeseen consequences that negatively affect your business in years to come. A contract lawyer can help you avoid unwanted surprises.

Another important point: if you agree with someone else to negotiate a contract later, then that agreement is generally not an enforceable contract itself.


In contract law, a consideration clause essentially establishes a relationship between you and the party with whom you’re contracting. “Consideration” refers to the “benefit to the promisor or a detriment to the promisee.”

Additionally, Texas case law has established that a monetary consideration is not necessary for a contract to be enforceable, but of course contracts frequently involve monetary considerations.

Competent Parties

Lastly, a binding contract must involve parties who are competent and authorized to enter into a contractual agreement.

Protect your interests by getting legal advice.

Your business contract should be developed specifically for your business, and cheap Internet-vended forms often prove to be more trouble than they’re worth. A contract lawyer can draft a contract that meets your business’ specific needs. For more on these matters, please see Slater Pugh Ltd. LLP’s overview of contract disputes.

Why Some Austin Homebuyers Are Going with Realtor-Free Transactions

With solid employment numbers and a high economic growth rate, Austin’s housing market is on track to break records this year. The Austin Board of Realtors reports that on average the price of a single-family home was $333,452 in October 2015. That price represents a 7-percent increase from the same time last year.

While this is all good news, higher home prices mean higher commissions for realtors, and sometimes homeowners look back on their residential real estate transactions and wonder whether a realtor was needed at all. Could that heavy cost have been avoided?

If you’re able to find your own home to purchase, then you may not need help from a realtor, but you do need to cover your legal bases.

In some cases, a realtor’s 6-percent cut can come to tens of thousands of dollars that, with the right legal help, could have been saved. If you’re buying a house at the current average price in Austin — $333,452 — then you may end up paying a realtor a 6-percent commission of $20,000. At the same rate, the realtor would get $60,000 if the home is priced at $1 million.

Don’t leave money on the table. Let a real estate law attorney help save you money and protect you from legal pitfalls and financial harm.

The reality is that the traditional home-buying process is not the best option for all homebuyers, and a realtor-free transaction may be the best way to minimize costs and maximize the deal.

At Slater Pugh Ltd. LLP, our real estate transaction attorneys provide advice and representation to homebuyers and home sellers. Our services include:

  • Drafting contracts, including offer letters and purchase agreements
  • Negotiating prices
  • Handling inspections, title-related matters, financing and closings

To learn more about a transactional strategy that is often more cost-effective than the traditional home-buying process, please see our real estate law overview.

What Creditors Need to Know About Debt Collection in Texas

Texas is known as being one of the most difficult states to collect debts in. Even if you went to court to obtain a judgment against a debtor, then you may still encounter difficulties in actually turning the judgment into money, especially if you’re in another state and trying to collect in Texas.

The reality is that federal and state laws tightly restrict the actions debt collectors can take, but with the right legal help, you can still collect what is rightfully yours in an ethical and professional manner.

To collect from an elusive or uncooperative debtor, it is crucial that you know what is permitted and what is not permitted by law.

In Texas, engaging in prohibited debt collection practices can result in civil and criminal penalties. To protect yourself and your business, speak with an experienced debt collection attorney before taking action.

The Fair Debt Collection Practices Act is the federal law that establishes guidelines for what is and what is not acceptable in debt collection efforts. This law only covers collectors who have been hired by debt collection agencies and lawyers who have been hired to collect a debt. Texas laws are broader in reach.

The Texas state laws that restrict creditor actions are the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act. These statutes apply not only to collection agencies and lawyers, but also to anyone who is trying to collect a debt.

What communication rules should creditors be concerned about when trying to collect a debt?

The state and federal laws are similar in that they generally prohibit abusive, harassing and fraudulent collection practices. Creditors may also encounter legal trouble with regard to how and when they communicate with debtors. The law specifies the time and manner in which a debtor can be contacted. For example, collection-related phone calls should generally not be made before 8 a.m. or after 9 p.m., unless those before- and after-hours times are known to be more convenient for the debtor.

Consumer protection laws also control the manner in which creditors can acquire location information about debtors. For example, in efforts to obtain a debtor’s location information from someone other than the debtor, a collector is not allowed to:

  • Send a post card
  • Communicate more than once with the third party unless the debtor requests otherwise, or unless the information provided by the third party is believed to be incomplete or erroneous
  • Indicate in the communication with the third party that the collector is a collector or that the communication relates to debt collection

For more information about legal issues related to collecting debts in Texas, please see Slater Pugh, Ltd. LLP’s overview of commercial debt collection.

Reports Positive for Texas Businesses. Is Your Company Legally Poised for Success?

Even as other parts of the country have struggled with economic shifts and downturns, Texas has long been a top promoter of business growth. In fact, a recent study by the finance company WalletHub ranked the City of Austin’s economy as the fastest-growing among large cities in the United States.

Among big cities, Fort Worth and Corpus Christi also came in the top five, and in the rankings of cities of any size, nine of the top 10, including Round Rock, are Texas cities. The study looked at economic growth in more than 500 communities since the start of the recession in 2008.

Colleges and universities in Texas are also doing their part to lay the groundwork for business growth.

In addition to the high performance of city economies, business schools throughout Texas continue to be outstanding on a global scale. Recently, a report from Financial Times ranked University of Texas at Austin, Rice University, Southern Methodist University, Texas A&M and University of Houston among the top international business schools worldwide.

The rankings are based on salaries of alumni three years after graduating.

Whether you’re just starting out or you’re a seasoned business owner, you can minimize risk and avoid losses by creating the right business structure and drafting solid, comprehensive contracts.

As a business owner, you want to stay in the positive. That means protecting your company from unwanted surprises while you focus on growth and operations. You want to do things right the first time, and you don’t want to lack proper legal counsel when you form a business and start signing contracts. The risk of loss is too great not to cover your legal bases.

At Slater Pugh, Ltd. LLP, we know the high importance of setting up your company with the appropriate structure and drafting contracts that are specific to your business. We are business-focused, deal-savvy lawyers with a strong record of success throughout Texas.

Our firm overview provides some insight into our areas of practice, our philosophyand the kinds of services we provide.

Neiman Marcus files IPO

Neiman Marcus filed for an initial public offering on Monday, June 24, more than eight years after going private in a sale to Fort-Worth based investment firm TPG Capital (formerly known as Texas Pacific Group) and global private equity firm Warburg Pincus, LLC.

Early this year, prior to the IPO filing, which is being run by Credit Suisse, Kohlberg Kravis Roberts offered a merger of Neiman Marcus and Saks, Inc., which Neiman Marcus declined

According to Neiman Marcus, it earned $140.1 million last year on top of $4.3 billion in revenue, making it the company’s healthiest fiscal year since 2008’s financial fall.

Whether you plan to make an initial public offering or take other legal action that affects the future of your company, consider enlisting the help and assistance of an experienced and knowledgeable lawyer

Canadian businessmen acquire Phoenix Coyotes from NHL for $170M

The National Hockey League sold the Phoenix Coyotes to a group of investors led by Canadian businessmen George Gosbee and Anthony LeBlanc for $170 million on Monday, August 5. The NHL acquired the Coyotes in 2009 after the team’s previous owners went bankrupt, compromising fans and players, as well as Phoenix, who poured $180 million into opening an arena for the team.

Gosbee, who serves as chairman and chief executive officer of Canadian financial services firm AltaCorp Capital, Inc., said the transaction was one of the most difficult ones he had ever facilitated in his 21 years in the financial industry.

LeBlanc was optimistic that the Coyotes will have a bright future under their management, saying that they are confident of becoming a Stanley Cup contender for the next 10 years.

NHL commissioner Gary Bettman said the sale provided the Coyotes the “opportunity to secure a stable, long-term future in Glendale.”

It is important for a business to acquire the services of an experienced and knowledgeable legal team when conducting business transactions and resolving legal issues, as these professionals can prevent major and expensive errors from occurring. Get in touch with the legal team of Slater Pugh Ltd. LLP by calling our Texas office today at to discuss your business’s legal needs.

The National Hockey League sold the Phoenix Coyotes to a group of investors led by Canadian businessmen George Gosbee and Anthony LeBlanc for $170 million on Monday, August 5. The NHL acquired the Coyotes in 2009 after the team’s previous owners went bankrupt, compromising fans and players, as well as Phoenix, who poured $180 million into opening an arena for the team.

Gosbee, who serves as chairman and chief executive officer of Canadian financial services firm AltaCorp Capital, Inc., said the transaction was one of the most difficult ones he had ever facilitated in his 21 years in the financial industry.

LeBlanc was optimistic that the Coyotes will have a bright future under their management, saying that they are confident of becoming a Stanley Cup contender for the next 10 years.

NHL commissioner Gary Bettman said the sale provided the Coyotes the “opportunity to secure a stable, long-term future in Glendale.”

Contact Us

Learn more about how we can handle your business’ legal needs.

Contact our offices today at (737) 261-0602 to speak with a qualified member of our legal team.