Canton Startup Attorneys & Lawyers

Statement of Work: What Is It?

A statement of work (SOW) is a document that lists all the work a supplier will do during a project. It will define the amount of work, the expected quality of the job performance, and the timeframe for completion.

A well-written SOW will help both parties understand the parameters of a successful project. A poorly worded SOW could lead to conflict. The parties may argue over unclear expectations and the definition of good work.

To avoid such arguments, a well-written SOW should include:

• A list of expected products and services
• A list of tasks leading to the product's creation
• Specifics regarding who will handle each of the listed tasks
• Due dates for deliverables
• Payment schedule and deadlines
• Determination of which party will helm the project and handle major responsibilit

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Preferred Equity: What is it?

Preferred equity is a general term used to describe any class of securities (stock, limited liability units, limited partnership interests) that has higher priority for distributions of a company’s cash flow or profits than common equity. Typically, all cash flow/profits remaining after required payments to a company's lenders are distributed to the preferred equity investors until they receive the full amount of a previously agreed upon return, commonly stated as a fixed percentage annual rate.

Prefe

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What Is Recapitalization?

Recapitalization happens when a company undergoes a restructuring of its financials. When this occurs, debt and equity are re-assessed and re-allotted. Usually, the goal is to improve the company's overall stability or status. Recapitalization may also be done in an attempt to optimize the company's structure for its capital. It generally occurs with the exchange of one type of financing for another. For example, shares may be exchanged for bonds.

Recapitalization is the way to organize a corporation's capital structure, including stock ownership and the rights and liabilities connected to each class or genre of stock. For shareholders of a business held together, this type of recapitalization is a nuanced, progressive strategy. In this sense, when undergoing recapitalization, a business is literally reorganizing — rights are being reorganized as they relate to stocks. The process is also called reorganization and inv

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Updated July 20, 2020: 

What Is Preferred Return?

A preferred return—simply called pref—describes the claim on profits given to preferred investors in a project. The preferred investors will be the first to receive returns up to a certain percentage, generally 8 to 10 percent. Once you reach this profit percentage, the excess profits are split among the rest of the investors as agreed upon in negotiations. This type of return is most commonly used in real estate investment.

How Is the Preferred Return Calculated?

There are three main questions when it comes to calculating the preferred return:

• Is it compounded or non-compounded? Compounded means that the calculation of a preferred return periodic growth amount comes from the amount of invested capital plus all previously earned but unpaid amounts.

• Is it cumulative or n

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Starting a new business can be both an exciting and terrifying experience. The reality is that slightly more than half of Minnesota businesses started in 2010 went out of business by 2015, and nearly one in five didn’t even survive the first year. So how do you make sure that your business is one of the success stories? Proper planning and knowledge of the key legal requirements and common pitfalls.

Basic Steps to Starting a Business in Minnesota

1. Prepare a Business Plan. A business plan is a roadmap for your business and the foundation of your success. Your plan will identity the problem you are trying solve, how you plan to solve it, and other keys to your success. Sample

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