Worcester Business Journal

wbjournal.com | April 3, 2023 | Worcester Business Journal 21 By Michael Brangwynne Brangwynne is an attorney specializing in civil litigation for Fletcher Tilton. I am often contacted by aggrieved home- owners, who have retained a home improve- ment contractor and find themselves in a difficult situation: Project deadlines have past, costs have soared, and phone calls are unanswered. Unfortunately, at that point, homeowners are left with limited options. To avoid these problems, consider the following. 5) Check the contractor's registration. Check that the contractor is registered as home improvement contractor with the Mass. Office of Consumer Affairs and Business Regulation. This provides protec- tions to the homeowner if the HIC causes financial damages. 4) Check the contractor's license. Both license and registration searches can be performed through the OCABR website. If there is any question, ask the contractor to provide documentation to confirm their licensing and registration status. 3) Check references and past projects. Speak to these people about the work the contractor performed. Ask the contractor in what municipalities they typically work and reach out to local officials, such as the town building inspector, to ask about the contractor's projects and reputation. 2) Ask for proof of insurance. A recurring theme we encounter is home improvement contractors who are judgment proof. You can obtain a legal judgment against them for the damages they have caused, but you will be unable to collect on that judgment, rendering it worthless. Unscrupulous home improvement contractors understand they will likely be sued and shelter their assets. If the project goes off the rails, you will be in a much better position if the contractor has insurance. Ask the contractor for proof of insurance coverage, and review it with an insurance professional or attorney to understand what issues would be covered. Understand the scope of coverage; for example, if the contractor does not have professional liability insurance, then defects in construction likely will not be covered. 1) Negotiate a written contract. This may sound self-serving coming from an attorney, but I cannot overemphasize the importance of this precaution. You must negotiate the terms of a written contract. That does not mean simply signing the standard contract provided to you by the contractor. Construction contracts are not simple documents, and you should consult with an attorney to understand the cost for the work, under what circumstances cost can increase, when payments should be made, and what to do if disputes arise. K N O W H O W Growing your business: Step one, preparing for the deal O utside contracted consultants provide valuable, specialized expertise for companies to complete crucial projects, lead and optimize their workforce, or launch special campaigns. In this first of a two-part 101, we look at the advantages and disadvantages of using consultants in your company on a contractual basis. Here are the pros of bringing in outside help. Part two will publish in the April 17 edition of WBJ. Cost savings. Your organization will save on payroll taxes and benefits costs in hiring a consultant, notes Jack Gordon at Bizfluent.com. is is especially true if you engage their services at the start of a new project, such as implementing a marketing strategy, he says. "Unlike regular employees, you don't have to maintain consultants on your payroll once the project you hired them for is complete," writes Gordon. As they are hired for that one task, consultants work with the end goal in mind, free from other work responsibility distractions. is means they are with your company only as long as they need to be. Targeted knowledge not found in your organization. Consultants "usually operate in narrow areas and bring in a detailed, in-depth expertise," says Entrepreneur's Payal Sondhi. "ey also help in bringing a different perspective to the table as their skillsets will be aligned with the current need of the organization. Hence, they not only can help you with decision-making processes but will build a structure matching your organization's goals, leading to an increase in productivity and investment, and generating a direct ROI." e strength of an outsider's perspective. Trying to solve business problems from within the company can lead to insular thinking, says business expert ommie Burger on LinkedIn. "A business consultant … can come into a situation with fresh eyes and see things from a new and objective angle," an angle that just may be the solution to a problem or nudge things toward a paradigm shi. 5 THINGS I know about... ... Hiring a home improvement contractor C O N S U LTA N T A D V A N TA G E S , P A R T 1 BY SUSAN SHALHOUB Special to WBJ Amy Morrissey is a partner at Bowditch & Dewey, a corporate law firm based in Worcester handling challenging litigation and complex regulatory issues. A specialist in mergers and acquisitions, Morrissey has negotiated high-value deals up to $200 million. BY AMY MORRISSEY Special to the WBJ I t may be every small business owner's dream: attract the attention of a major company and get acquired for millions of dollars. But before too many dollar signs start dancing in owners' heads, they need to take some critical steps, or else their business dreams could easily turn into nightmares. e first step in every merger or acquisition is due diligence: conducting a comprehensive appraisal of a business to evaluate its commercial potential. It may sound deadly boring, but skimping on tedious financial or legal work could result in a less lucrative deal. It's not that different from preparing a house for sale: cleaning and staging it will oen fetch a much higher price. I've worked on hundreds of mergers and acquisitions and have witnessed the importance of due diligence. I've seen deals fall apart completely because records were too messy, while others went for a premium because of companies' meticulous books. Owners should start looking at their books and records as soon as they know they are going to market, since this process can take much longer than expected. ey should go above and beyond the minimum financial requirements. at means complying with generally accepted accounting W W principles or international business standards. Owners need to make sure they have three full years of records, complete with balance sheets, income statements, and statements of cash flows. ey should have up-to-date inventory reports, too, as well as future forecasts, growth trends, and lists of short- and long-term debts. Collection rates, bad debt, and taxes all need to be in order, too. It's oen wise to conduct a self-audit to find any hidden liabilities. ere are a host of legal niceties as well. Most private companies forget the importance of corporate formalities and do not keep up-to-date with bylaws, stock ledgers, or annual reports. ey need to remember many changes within the company, such as a 401(k) change or a newly appointed officer, trigger the need for board approval. Without following such formalities, securing a great deal could be more challenging. Understand any judgments, outstanding litigation, or potential litigation and be able to explain how risk could be mitigated. It may be worthwhile to consider a self-audit of licensures and regulatory compliance. When I represented a healthcare company that hadn't sent appropriate notices about closing some facilities, the buyer held back several million to mitigate the risk of non-compliance. If that weren't enough, contractual obligations need to be examined carefully, too. Businesses must make sure they have executed complete copies of their top 20 customer and supplier agreements, including any employee contracts. ey should look for clauses posing future legal obligations, such as penalties for early termination. While it may seem like a hassle to do all this work before formal due diligence starts in a merger, the time owners invest in these tasks will boost their chances of snagging the deal of their dreams. W

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