A letter of intent (LOI) is the preliminary agreement entered into between a buyer and a seller. This document summarizes the transaction terms and conditions that have in principle been agreed to by both parties. Here’s a walkthrough on the key items found in a LOI.

An Indication of Interest (IOI) is a non-binding offer submitted to Seller to indicate valuation in general terms, usually a range of for the consideration the Buyer would pay. Obviously, IOIs may have a different order for paragraphs and information but generally an IOI is contains the following information.

A non disclosure agreement (NDA) is a confidentiality agreement between two parties. This basically prevents one of the parties from disclosing the information specified in the agreement. This helps to ensure proprietary and sensitive material is kept confidential. A NDA usually contains the following key items:

Swift Financial issued a press release highlighting that it raised $20 million in funding today.  This supplements the $6.5 million that Swift had already raised.  According to the press release, investors included Sutter Hill Ventures, Village Ventures, Permit Capital and a subsidiary of Marshall & Ilsley Corporation.

Swift’s motto appears to be KISS - keep it simple stupid. See below for some of items it lists on its website and some comments on its online application. Overall, it basically seems like it’s nothing more than a credit card - just with different marketing spin.

Businesses need capital for a variety of reasons. Generally speaking, below are the reasons capital may be required:

• Startup

• Working Capital

• Expansion / Growth

• Estate Planning

Startup

Now, let’s assume there’s a great product (e.g., innovative) or service that you want to sell. To sell this product or service, you will need some infrastructure and resources (e.g., computers, equipment, people, software, etc). Yes unfortunately, the old adage, you must spend money to make money, is true.

Working Capital

There is typically a lag between the time your product and/or service is sold to a customer and the time you receive payment. This lag depends on the customer but typically is between 30-60 days once the customer is invoiced. But, you likely will have to pay your suppliers / vendors within 15 - 30 days for the raw materials you need to make your product or service. Therefore, you owe money for the raw materials before you have actually received payment from your customers. In addition, some expenses typically are prepaid (e.g., insurance, rent, etc.), which will increase the cash needs of your business.

We will soon be posting an overview of items to consider when negotiating agreements with suppliers and vendors.

here is a general process that holds true for M&A processes. For purposes of this discussion, we will be taking the potential buyers point of view. This walk through is of course a simplified, high-level walk through but it should provide a useful base. We will be adding more details and examples around the M&A process soon. The M&A process can be broken up into a couple segments as shown below. The M&A process includes several documents including:

There are several state and/or federal licenses, permits and/or requirements that you need to be aware of as you start a business. While my list below is not meant to be a complete list, the following items are a good place to start:

According to the National Federation of Independent Business, small business owners cite employer sponsored health insurance as their biggest source of concern. A recent SBA report reported that the two most important factors associated with being uninsured are (i) firm size and (ii) wages. There are a lot of healthcare plan options for business options:

• Group Plans - There are several types of group plans.

  • Traditional Plans- covers reasonable healthcare expenses. Insured may go to doctor of choice.

  • HMO-covers reasonable healthcare expenses but insured must utilize doctors, provides within the HMO’s network.

  • Point of Service Plans - just as it sounds, fees paid as employees receive services. These plans often have additional fees that are burdensome to the plan participants. Therefore, FFS plans should be more of a last resort.

• Medical Savings Account (MSA) Plans - this is a consumer directed plan. It allows a company’s employees to have a tax savings account that may be used for medical expenses. These plans generally have high deductibles.

In addition, to healthcare insurance, there are several types of insurance that a business owner should have a basic understanding of to ensure the business and employees are protected.