The summit is a complimentary half-day event for women business owners who want to grow their business or are looking to sell their company within the next few years.

Register here: Women’s Business Summit.

LOCATION

Maslon LLP
225 South Sixth Street
Minneapolis, MN 55402

AGENDA

1:30 p.m. | Registration & Networking

1:45-1:50 p.m. | Opening Remarks and Introductions

Nicole Middendorf, Wealth Advisor, Raymond James Financial Services; CEO, Prosperwell Financial

1:50-2:40 p.m. | Panel Discussion: Business Exit Strategies to Consider

Panel discussion moderated by Dyanne Ross-Hanson, with panelists Nicole Middendorf, Susan Markey, Katie Monger, and Jo Trahms.

• How early should you begin planning to sell your business?
• Exit/transition options, and the advantages/disadvantages of each
• What your company is worth, and ways to increase value prior to a sale
• Role of a CPA, attorney, wealth advisor, and investment banker during a transaction
• Best practices for women business owners
• Readiness planning
• Q&A

2:40–3:05 p.m.: Break: Refreshments, Networking, and Connecting with Vendors

3:05–3:55 p.m.: Roundtable Discussion: Your Top Questions Answered by Successful Women Business Owners

Panel discussion moderated by Dyanne Ross-Hanson, with panelists Hillary Spreizer, Jill Haspert, Ashley Hawks, and Kathryn Tunheim.

• Buying, selling, and growing your business
• What do you know now that you wish you knew then?
• Q&A

3:55–4 p.m.: Closing Remarks

4-5 p.m.: Networking Reception

"As a business owner myself, I’ve experienced firsthand the complexities and opportunities that come with launching, growing, and sustaining a company in Minnesota,” Matt said. “I'm eager to deepen my understanding of the broader economic landscape and to learn how other businesses across the state are adapting and thriving."

Matt is an accomplished attorney and seasoned entrepreneur who returned to private practice after a decade of successfully running his own business. As the principal co-founder and board chair of Bauhaus Brew Labs, Matt has personally walked in the shoes of business owners and has overcome many of the same challenges. He has a proven track record of founding, developing, and expanding a small business, and his experience honed his capabilities in business finance, commercial transactions, strategic planning, and regulatory issues.

Matt assists clients with corporate formation and governance issues; securities offerings for closely held businesses; commercial contracts, including purchase agreements, sales and distribution contracts, and lending instruments; and general outside counsel services, particularly on compliance issues and regulatory considerations for food, beverage, and emerging cannabis businesses in Minnesota.

The book delivers a comprehensive analysis of the legal framework governing business and commerce in Minnesota, from choosing the right business entity and understanding tax implications to resolving shareholder disputes and navigating secured transactions.

For more information or to order, go to LexisNexis Minnesota Business and Commercial Law.

Susan is ranked in Chambers USA among the top corporate/M&A attorneys in Minnesota. She represents clients in general corporate, taxation, and nonprofit matters, drawing from a diverse background in government, accounting, and law to serve as a holistic business advisor. Susan regularly counsels clients on mergers and acquisitions, business formation, joint ventures, and general corporate matters, and she frequently assists with tax controversies, audits, appeals, planning, and structuring, as well as researching tax law and drafting legal appeals and memoranda. Susan also serves on the Maslon board of directors.

Katie, chair of the Corporate & Securities Group, assists clients across a broad range of corporate and transactional legal needs. She has managed and negotiated complex mergers & acquisitions, corporate reorganizations, buy-sell agreements, and business succession agreements. Her expertise also includes negotiating, drafting, and revising commercial contracts, with particular focus on technology-related agreements. In addition, she ensures clients remain up to date and compliant on data retention, website terms of use, and website privacy policies.

Terri, a business attorney and mediator, focuses her practice on M&A, restructurings and shareholder business divorces, and mediation of commercial disputes. She currently serves as a senior counsel with Maslon.

Yujin advises clients on contract drafting and negotiation, compliance issues, and general corporate law. Her background in international trade informs her approach to common and uncommon business challenges and how to successfully manage them.

Jessica assists clients in general corporate law, nonprofit formation, contracts, and mergers and acquisitions. Prior to attending law school, Jessica earned her master’s degree from Georgetown University in art and museum studies, and gained valuable experience as a museum collections and exhibitions manager and as a grant writer.

Matthew is an accomplished attorney and seasoned entrepreneur who returned to private practice after a decade of successfully running his own business. As the principal co-founder and board chair of Bauhaus Brew Labs, Matt has personally walked in the shoes of business owners, honing his capabilities in business finance, commercial transactions, strategic planning, and regulatory issues.

Laura is a Corporate & Securities Group associate who collaborates with corporate clients to achieve their business goals while protecting their legal interests. Laura focuses on mergers and acquisitions, contract drafting and negotiation, and legal compliance. She has a passion for helping small business owners and finds that these relationships are the driving force behind her work.

The summit is a complimentary half-day event for women business owners. Susan will serve as a panelist for "Business Exit Strategies to Consider."

RSVP here: Women's Business Summit.

AGENDA

1:30 p.m. | Check in

1:45-1:50 p.m. | Opening Remarks & Introductions

1:50-2:40 p.m. | Panel 1: Business Exit Strategies to Consider

Panel discussion moderated by Dyanne Ross-Hanson, with panelists Nicole Middendorf, Susan Markey, and Katie Monger.

• How early should you begin planning?
• Exit/transition options: Advantages and disadvantages of each
• What’s my company worth and ways to increase value prior to a sale
• Role of a CPA, attorney, wealth advisor, and investment banker during a transaction
• What you need to do before the year is over for your business
• Your top questions answered

2:40-3:05 p.m. | Networking

3:05-3:55 p.m. | Panel 2: Your Questions Answered from Women Business Owners: Successful Business Owner Roundtable

Panel discussion moderated by Julie Keyes, with panelists Melanie Porter, Mary Nutting, Lori Bauer, and Hillary Spreizer.

• Buying, selling, and growing your business
• Ask your questions of women business owners
• What do you know now that you wish you knew then?

3:55-4:00 p.m. | Closing Remarks

4:00-5:00 p.m. | Networking with Refreshments

Matt earned his law degree, cum laude, at the University of St. Thomas School of Law and his bachelor's from Belmont University in Nashville.

"I am looking forward to learning more about Minnesota businesses, the challenges they face, and the issues that will shape the future of our state," Katie said. "I'm especially excited about the visits we will make to businesses throughout the state and the opportunity to talk with industry leaders."

Katie assists clients across a broad range of corporate and transactional legal needs. She has managed and negotiated complex mergers & acquisitions, corporate reorganizations, buy-sell agreements, and business succession agreements. Her expertise also includes negotiating, drafting, and revising a variety of commercial contracts, with particular focus on technology-related agreements. She ensures clients remain up to date and compliant on data retention, website terms of use, and website privacy policies, and she protects her clients' intellectual property interests in the areas of copyrights and trademark application and management.

Clients also rely on Katie's expertise in corporate governance issues; she frequently acts as outside general counsel, providing guidance on entity formation, operating agreements, shareholder control agreements, ownership disputes, employment disputes, and the drafting of company policies regarding communications, signing authority, spending authority, and related matters.

Susan will serve as a panelist for "Business Exit Strategies to Consider" and "Legal & Financial Strategies to Consider."

For more information or to register, write to Info@Maslon.com.

Susan represents clients in mergers and acquisitions, general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that legal advice should be both easy to understand and practical.

A buy-sell agreement is an agreement that outlines what happens to an owner’s share in an entity when that owner desires to transfer shares upon their death or departure. Buy-sell agreements are frequently used by closely held corporations, LLCs, and partnerships to facilitate transitions in ownership. Connelly has far-reaching consequences for any company with a buy-sell agreement funded by life insurance.

A Tale of Two Brothers

Two brothers—Michael and Thomas Connelly—were the only shareholders in a small building supply corporation. Because they wanted the company to stay in the family upon either of their deaths, they entered into a buy-sell agreement requiring the company to buy the shares of the first brother to die if the surviving brother declined to purchase them. The company obtained a life insurance policy on each brother to make sure it would have enough money to satisfy this requirement. 

When Michael died, Thomas elected not to purchase Michael’s shares, triggering the company’s purchase obligation. The company used the $3 million in life insurance proceeds it received as a result of Michael’s death to buy the shares. As executor of Michael’s estate, Thomas was required to file a federal estate tax return detailing the value of Michael’s assets, including his shares in the company. Thomas engaged a third party who determined that Michael’s shares in the company were worth $3 million; however, the third party excluded the life insurance proceeds when determining the fair market value of the company. Thomas reported the $3 million value on the estate tax return, relying on the Eleventh Circuit’s decision in Estate of Blount, which held that insurance proceeds should not be included in the value of a corporation when they are “offset by an obligation to pay those proceeds to the estate in a stock buyout,” 428 F.3d 1338, 1345.  

The IRS disagreed with Thomas’s reasoning. During its audit of Michael’s estate, the IRS contended that the total valuation of the company should include the life insurance proceeds—thereby making the total value of the company $6.86 million, rather than $3.86 million, when Michael died. Accordingly, the IRS said that Michael’s estate should have paid higher taxes based on the higher valuation of Michael’s stock. The estate paid the taxes and then sued the IRS for a refund. 

Supreme Court: Life Insurance Counts in Estate Tax Valuation

The case made it all the way to the Supreme Court. The dispute focused on the inclusion of the life insurance proceeds as part of the company’s total fair market value for purposes of the estate tax. The Supreme Court sided with the IRS in a unanimous decision, holding that life insurance proceeds that will be used to redeem a decedent’s shares must be counted when calculating the value of those shares for estate tax purposes. The court emphasized that the point of the estate tax is to assess the value of Michael’s shares at the time he died—even if the value would be drastically different a day later, once the life insurance proceeds were paid out.

What It Means for Your Business

A better understanding of the consequences of their buy-sell agreement may have prevented years of litigation for the Connelly family. There were alternate options available. The brothers could have purchased life insurance policies on each other, rather than having the company take out the life insurance. This structure, known as a cross-purchase agreement, would have placed the life insurance proceeds outside the company’s assets, potentially reducing the estate tax burden. (It is important to note that a cross-purchase agreement may have had different tax consequences for the brothers personally, but would have avoided a situation where the company experienced a stark increase in valuation.)

Connelly affects any company—including corporations, LLCs, and partnerships—with a buy-sell agreement funded by life insurance. Companies utilizing buy-sell agreements funded by life insurance should promptly review these agreements to ensure the best possible arrangement is in place to accomplish their owners’ goals and minimize tax liability.

We Can Help

Each estate plan is unique to the individual’s circumstances and wishes. If you own shares in a closely held company, it is imperative that you fully understand the tax implications of both your business succession plan and estate plan. Maslon’s experienced Estate Planning and Corporate groups can work together to help you navigate the complexities of estate planning for closely held businesses to ensure your wishes are met and tax liabilities are minimized.

For more information or to register, go to Minnesota CLE: How to Draft Better Contracts.

Terri Krivosha is a former partner and now senior counsel and chair of professional development at Maslon. A business attorney and mediator, she enjoys nothing more than helping shareholders, family business owners, and companies buy or sell businesses or solve their legal problems—the more complicated, the better. As a deal lawyer, rather than a litigator, she is unique among mediators because she brings her many years of experience negotiating deals to the mediation table.

The seminar features two presentations:

• Demystifying the Deal: Business owners may be unfamiliar with the transaction process or simply looking to sharpen their understanding. This panel will provide a roadmap of what should happen before, during, and after the sale of a company.
• Five Ways to Maximize the Value of Your Business for Sale: Owners—and potentially their family members, co-investors, and other key stakeholders—know better than anyone what it has taken to grow their business and the impact that its sale would have on their future. Panelists describe how to help ensure a positive outcome.

To register for the event, go to M&A Seminar on Preparing Your Company for Sale.

Susan Markey, a partner and chair of Maslon's Corporate & Securities Group, represents clients in mergers and acquisitions, general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that legal advice should be both easy to understand and practical.

Evan Berquist is a partner in Maslon's Corporate & Securities Group focusing on mergers and acquisitions, strategic financing transactions, and general corporate and commercial matters. He has a decade of experience in private practice, most recently at an AmLaw100 firm, managing both domestic and international transactions for a wide range of clients.

Katie Eisler, a Corporate & Securities Group partner, manages and negotiates complex mergers & acquisitions, corporate reorganizations, buy-sell agreements, and business succession agreements. Her expertise also includes negotiating, drafting, and revising a variety of commercial contracts, with particular focus on technology-related agreements.

Terri Krivosha is a former partner and now senior counsel and chair of professional development at Maslon. A business attorney and mediator, she enjoys nothing more than helping shareholders, family business owners, and companies buy or sell businesses or solve their legal problems—the more complicated, the better. Terri loves helping clients and parties to a mediation resolve conflict.

For more information or to register, go to: Strafford: Structuring Acquisitions of Family-Owned Businesses.

Terri, a business attorney and mediator, helps shareholders, family business owners, and companies buy or sell businesses or solve their legal problems. Whether guiding shareholders through a company split, managing a large merger/acquisition for a buyer or a seller, representing family members or business partners in the sale of a long-held business, or helping a company restructure to better align business and goals, Terri brings a time-tested sense of which approaches work and which do not. In her mediation work, Terri brings her many years of experience negotiating deals to the table—along with her high energy, active listening skills, creativity, and pragmatic approach. View her mediation bio here.

For more information or to register, go to: Minnesota CLE 2023 Business Law Institute.

Terri, a business attorney and mediator, helps shareholders, family business owners, and companies buy or sell businesses or solve their legal problems. Whether guiding shareholders through a company split, managing a large merger/acquisition for a buyer or a seller, representing family members or business partners in the sale of a long-held business, or helping a company restructure to better align business and goals, Terri brings a time-tested sense of which approaches work and which do not. In her mediation work, Terri brings her many years of experience negotiating deals to the table—along with her high energy, active listening skills, creativity, and pragmatic approach. View her mediation bio here.

Terri and Susan team up for "Preventing Member Conflicts Under Chapter 322C: Drafting Challenges," in which they and Mitchell Hamline law professor Daniel Kleinberger discuss how transactional attorneys can help business owners plan for and prevent future disputes on the front end under Chapter 322C.

In addition, Terri presents "Negotiating Resolutions to Ownership Disputes Like a Pro to Avoid Litigation." In this session, she describes how to identify the questions your client is not asking (but should be) in a shareholder dispute, best practices for negotiating difficult issues, and how to identify themes in shareholder disputes that will help resolve the matter without litigation.

For more information or to register, go to Minnesota CLE: Ownership Disputes in Closely Held Businesses.

Terri, a business attorney and mediator, helps shareholders, family business owners, and companies buy or sell businesses or solve their legal problems. Whether guiding shareholders through a company split, managing a large merger/acquisition for a buyer or a seller, representing family members or business partners in the sale of a long-held business, or helping a company restructure to better align business and goals, Terri brings a time-tested sense of which approaches work and which do not. In her mediation work, Terri brings her many years of experience negotiating deals to the table—along with her high energy, active listening skills, creativity, and pragmatic approach. View her mediation bio here.

Susan represents clients in general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that tax and corporate advice should be both easy to understand and practical. Susan assists clients with a wide array of tax issues, including tax controversies, audits, appeals, planning, and structuring, as well as researching tax law, drafting legal appeals, and memoranda. In addition to her tax practice, Susan counsels clients on mergers and acquisitions, business formation, joint ventures, and general corporate matters, while leveraging her tax background to help guide them toward profitable solutions.

For more information or to register, go to MSBA: Settling Disputes Through Early Mediation.

Terri, a business attorney and mediator, helps shareholders, family business owners, and companies buy or sell businesses or solve complex legal problems. Whether guiding shareholders through a company split, managing a large merger/acquisition for a buyer or a seller, representing family members or business partners in the sale of a long-held business, or helping a company restructure to better align business and goals, Terri brings a time-tested sense of which approaches work and which do not. In her mediation work, Terri brings her many years of experience negotiating deals to the table—along with her high energy, active listening skills, creativity, and pragmatic approach. View her mediation bio here.

Melissa is an employment and business litigation attorney who enjoys working with clients to protect and grow their business in a competitive marketplace. She focuses her practice on the full spectrum of employment counseling and litigation matters in addition to business disputes involving non-competition and non-solicitation agreements, trade secrets, business contracts and torts, and unfair competition and trade practices. She serves on the board of the Minnesota Infinity Project, an organization focused on gender disparity on the bench throughout the Eighth Circuit, and was appointed in 2019 to the state Commission on Judicial Selection.

For more information or to register, go to Minnesota CLE: Advanced M&A

Terri, a business attorney and mediator, helps shareholders, family business owners, and companies buy or sell businesses or solve their legal problems—the more complicated, the better. Whether guiding shareholders through a company split, managing a large merger/acquisition for a buyer or a seller, representing family members or business partners in the sale of a long-held business, or helping a company restructure to better align business and goals, Terri brings a time-tested sense of which approaches work and which do not. In her mediation work, Terri brings her many years of experience negotiating deals to the table—along with her high energy, active listening skills, creativity, and pragmatic approach. View her mediation bio here.

Susan represents clients in general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that tax and corporate advice should be both easy to understand and practical. Susan assists clients with a wide array of tax issues, including tax controversies, audits, appeals, planning, and structuring, as well as researching tax law, drafting legal appeals, and memoranda. In addition to her tax practice, Susan counsels clients on mergers and acquisitions, business formation, joint ventures, and general corporate matters, while leveraging her tax background to help guide them toward profitable solutions.

For more information or to register, go to Minnesota CLE: Key Lessons for Complex Business Transactions

Susan represents clients in general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that tax and corporate advice should be both easy to understand and practical. Susan assists clients with a wide array of tax issues, including tax controversies, audits, appeals, planning, and structuring, as well as researching tax law, drafting legal appeals, and memoranda. In addition to her tax practice, Susan counsels clients on mergers and acquisitions, business formation, joint ventures, and general corporate matters, while leveraging her tax background to help guide them toward profitable solutions.

Brad regularly represents manufacturers, contractors, technology, entertainment, and retail businesses in venture formations, raising capital, corporate finance, mergers & acquisitions, public reporting and general corporate matters. He has a diverse client base and enjoys working with businesses at different points of their life cycles. Brad works with entrepreneurs and dynamic startups to develop scalable business models and corporate structures for growth and raising capital. He also works with established businesses to raise capital in the private and capital markets, continue to grow organically and through strategic acquisitions, and to realize exit events.

For more information or to register, go to ALI-CLE: Structuring the Sale of a Business: Transaction Tips from the Trenches

Terri, a business attorney and mediator, enjoys nothing more than helping shareholders, family business owners, and companies buy or sell businesses or solve their legal problems—the more complicated, the better. Whether guiding shareholders through a company split, managing a large merger/acquisition for a buyer or a seller, representing family members or business partners in the sale of a long-held business, or helping a company restructure to better align business and goals, Terri brings a time-tested sense of which approaches work and which do not. In her mediation work, Terri brings her many years of experience negotiating deals to the table—along with her high energy, active listening skills, creativity, and pragmatic approach. View her mediation bio here.

Susan represents clients in general corporate, taxation, and nonprofit matters. She draws from a diverse background in government, accounting, and law to serve as a holistic business advisor, and strongly believes that tax and corporate advice should be both easy to understand and practical. Susan assists clients with a wide array of tax issues, including tax controversies, audits, appeals, planning, and structuring, as well as researching tax law, drafting legal appeals, and memoranda. In addition to her tax practice, Susan counsels clients on mergers and acquisitions, business formation, joint ventures, and general corporate matters, while leveraging her tax background to help guide them toward profitable solutions.

For more information or to register, go to: Minnesota CLE 2022 Business Law Institute.

Terri is passionate about helping businesses grow, succeed, and scale. As a strategic business attorney, she helps a vibrant network of entrepreneurial and dynamic businesses see the "forest through the trees." She works directly with the business people who lead organizations, providing general counsel advice that is not only prompt and pragmatic, but also customized to fit the stage of the client's business. She is exceptionally skilled at negotiating and drafting multiple kinds of contracts, strategic partnerships, and joint ventures; developing and implementing exit strategies; advising on selling or buying companies and raising capital to recapitalize businesses; and coaching clients on complex governance matters. In a testament to her distinguished career and profound impact in the community, Terri was named a 2021 Minnesota Icon by Finance & Commerce.

To answer a clear need in the marketplace for creative evaluative mediators who can assist counsel with dispute resolution, Terri has expanded the services she provides. As a qualified Rule 114 mediator, she brings her high energy, active listening skills, broad experience, creativity, and pragmatic approach to her mediation practice. View CV.

For more information or to register, go to: "Breaking Up Is Hard to Do: Navigating Business Separations Without Destroying the Business."

Terri is passionate about helping businesses grow, succeed, and scale. As a strategic business attorney, she helps a vibrant network of entrepreneurial and dynamic businesses see the "forest through the trees." She works directly with the business people who lead organizations, providing general counsel advice that is not only prompt and pragmatic, but also customized to fit the stage of the client's business. She is exceptionally skilled at negotiating and drafting multiple kinds of contracts, strategic partnerships, and joint ventures; developing and implementing exit strategies; advising on selling or buying companies and raising capital to recapitalize businesses; and coaching clients on complex governance matters. In a testament to her distinguished career and profound impact in the community, Terri was named a 2021 Minnesota Icon by Finance & Commerce.

To answer a clear need in the marketplace for creative evaluative mediators who can assist counsel with dispute resolution, Terri has expanded the services she provides. As a qualified Rule 114 mediator, she brings her high energy, active listening skills, broad experience, creativity, and pragmatic approach to her mediation practice. View CV.

The 60-minute CLE program will include participant breakout sessions to discuss two hypothetical cases and determine whether either should be mediated early—with conclusions shared through interactive polling.

The event is open to all. Register at: "Settling Disputes Through Early Mediation: A Framework for Success," Association of Corporate Counsel.

Terri is passionate about helping businesses grow, succeed, and scale. As a strategic business attorney, she helps a vibrant network of entrepreneurial and dynamic businesses see the "forest through the trees." She works directly with the business people who lead organizations, providing general counsel advice that is not only prompt and pragmatic, but also customized to fit the stage of the client's business. She is exceptionally skilled at negotiating and drafting multiple kinds of contracts, strategic partnerships, and joint ventures; developing and implementing exit strategies; advising on selling or buying companies and raising capital to recapitalize businesses; and coaching clients on complex governance matters.

To answer a clear need in the marketplace for creative evaluative mediators who can assist counsel with dispute resolution, Terri has expanded the services she provides. As a qualified Rule 114 mediator, she brings her high energy, active listening skills, broad experience, creativity, and pragmatic approach to her mediation practice. View CV.

Melissa is an employment and business litigation attorney who enjoys working with clients to protect and grow their business in a competitive marketplace. She focuses her practice on the full spectrum of employment counseling and litigation matters in addition to business disputes involving non-competition and non-solicitation agreements, trade secrets, business contracts and torts, and unfair competition and trade practices. Melissa also maintains a robust pro bono practice, primarily serving as counsel to the American Civil Liberties Union of Minnesota in litigation involving individual employment matters, constitutional rights, and government transparency.

Among his many points of advisement featured, Michael shares, "Sometimes people take control too far by not including enough flexibility for the beneficiaries. As a result, what seems like a reasonable provision in a trust today might make no sense some years down the road."

To read the full article, go to: Construction Magazine Network, "Protecting Valuable Assets from Outside Threats."

Michael's legal practice focuses on high-end estate and tax planning, estate and trust administration, charitable planning, and business succession planning. Michael helps his clients focus on what it is they really want to accomplish with their wealth. After assisting his clients in identifying their specific wealth planning goals, Michael works with them and their other professional advisors to develop and implement wealth transfer strategies that are consistent not only with their goals, but also with their cash flow needs and tolerance for risk.

It is this practical focus on the real-life impact of wealth transfer planning that distinguishes Michael's approach from that of the typical estate planning attorney. Beyond preparing legal documents, he also serves as his clients' wealth coach, personal CFO, professional pest, and skeptic-for-hire. Michael also provides his clients with access to his deep network of contacts, which often leads to solutions for many of life's little problems, even if they're completely unrelated to what you would normally think of as "estate planning."

To learn more or to register, go to: Minnesota CLE, Shareholder Disputes in Closely-Held Businesses.

Terri is passionate about helping businesses grow, succeed, and scale. As a strategic business attorney, she helps a vibrant network of entrepreneurial and dynamic businesses see the "forest through the trees."

Terri works directly with the business people who lead organizations, providing general counsel advice that is not only prompt and pragmatic, but also customized to fit the stage of the client's business. She is exceptionally skilled at negotiating and drafting multiple kinds of contracts, strategic partnerships, and joint ventures; developing and implementing exit strategies; advising on selling or buying companies and raising capital to recapitalize businesses; and coaching clients on complex governance matters. Terri works with clients in many industries, including manufacturing, technology, healthcare, consumer products, and professional services, bringing her experience in one industry to inform her advice in other industries.

• An Interim Final Rule ("Consolidated IFR") consolidating all of the rules applicable to PPP loans.
• An Interim Final Rule ("Second Draw IFR") on loans ("Second Draw PPP Loans") guaranteed by SBA to borrowers that previously received loans ("First Draw PPP Loans") under the PPP.

CONSOLIDATED IFR

The majority of the Consolidated IFR restates the previously released rules and guidance applicable to the PPP. However, the Consolidated IFR also clarifies the changes made to the PPP by the passage of the Economic Aid Act, as we highlighted in our previous legal alert: Coronavirus Relief Under the Consolidated Appropriations Act, 2021. Key changes made by the Economic Aid Act include deeming exchange-listed publicly held companies ineligible for PPP loans, deeming farmers and ranchers as eligible, and applying the "per location" employee headcount already applicable to restaurant and hotel businesses to certain news organizations.

SECOND DRAW PPP LOANS

Clarifications to Second Draw PPP Loans. Generally, Second Draw PPP Loans are subject to the same terms, conditions, and requirements as First Draw PPP Loans. However, borrowers seeking to obtain a Second Draw PPP Loan should be aware of several key considerations outlined in this alert. Supplementing the eligibility requirements in the Economic Aid Act (outlined in our previous legal alert: Coronavirus Relief Under the Consolidated Appropriations Act, 2021), the Second Draw IFR clarifies:

• For the requirement that an eligible borrower must have used (or will use) the "full amount" of the First Draw PPP Loan on or before the expected date on which the Second Draw PPP Loan is (or will be) disbursed, the Second Draw IFR clarifies the calculation of the "full amount" includes any increase on a First Draw PPP Loan made pursuant to the Economic Aid Act.
• For the requirement that an eligible borrower must have experienced a reduction in gross receipts of 25% or greater in at least one quarter in 2020 as compared to the corresponding quarter in 2019, the Second Draw IFR deems a borrower that was in business all four quarters of 2019 to have experienced the required revenue reduction if it experienced a reduction in annual receipts of 25% or greater in calendar year 2020 compared to calendar year 2019 if the borrower submits copies of its annual tax forms.
• The following entities are not eligible for a Second Draw PPP Loan: (a) any entity that previously received a Second Draw PPP Loan, and; (b) any entity that has permanently closed.
• Borrowers may use calendar year 2020 for calculating its payroll costs, in addition to calendar year 2019 and the twelve-month period prior to when the loan is made.
• A borrower that is a hotel or restaurant and also constitutes a seasonal business may calculate its average payroll costs based on the applicable methodology (i.e., by virtue of its status as a seasonal business), but is still eligible for the 3.5 multiplier applicable to hotel and restaurant businesses.
• Businesses that are part of a single corporate group may receive no more than $4,000,000 of Second Draw PPP Loans in the aggregate, which is less than the $20,000,000 maximum amount for corporate groups relating to First Draw PPP Loans.

Loans to Borrowers with Unresolved First Draw PPP Loans. If a lender submits an application for a guaranty of a Second Draw Loan for a borrower whose First Draw PPP Loan is under review (an "Unresolved Borrower"), the lender will not receive an SBA loan number until the issue related to the First Draw PPP Loan is resolved. SBA will set aside available appropriations to fund Second Draw PPP Loans applied for by Unresolved Borrowers.

Gross Receipts. "Gross receipts" for the purpose of calculating the revenue reduction is defined as all revenue in whatever form received or accrued (in accordance with the entity's accounting method) from whatever source, including the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered "total income" plus "cost of goods sold," and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms. Gross receipts do not include the following:

• taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees);
• proceeds from transactions between a concern and its domestic or foreign affiliates; and
• amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder, or customs broker.

All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer's request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts.

If a borrower has acquired an affiliate or been acquired as an affiliate during 2020, gross receipts includes the receipts of the acquired or acquiring concern. In addition, the amount of any forgiven First Draw PPP Loan is not included toward the borrower's gross receipts.

Certifications. On the Second Draw PPP Loan application, an authorized representative of the borrower must make all of the certifications required to obtain a First Draw PPP Loan, except the certification that the borrower has not and will not receive another loan under the PPP is replaced with a certification that the borrower has not and will not receive another Second Draw PPP Loan. Importantly, this means that a borrower applying for a Second Draw PPP Loan will once again need to certify that current (presumably at the time of the Second Draw application) economic uncertainty makes the loan request necessary to support its ongoing operations.

In addition, the application will need to make additional certifications specific to Second Draw PPP Loans as required by the Economic Aid Act (e.g., it experienced a 25% reduction in gross receipts, it has received a First Draw PPP Loan, which has been or will be used by the date the Second Draw PPP Loan is disbursed). The new Second Draw applications are expected to be available very soon.

We Can Help

Please contact Maslon's Corporate & Securities Group if you have questions or need assistance applying for a loan under the revived Paycheck Protection Program.

1. Tax Implications: PPP Loan Expenses Are Tax Deductible

The Act provides that business expenses paid for with forgiven PPP loan proceeds are tax deductible under the Internal Revenue Code. This reverses previous IRS guidance that such expenses were not deductible. Providing welcome relief to loan recipients, the Act specifies that "no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by [the provision stating forgiven PPP loans do not count as income]." For PPP loan recipients that already submitted a tax return, talk to your accountant about amending your return if you did not previously deduct your expenses.

Additional Deduction: The Act also temporarily allows for the full deduction of business meals provided by a restaurant paid or incurred between December 31, 2020 and January 1, 2023.

2. Second Round of PPP Loans

The Act also injects another $284 billion into PPP loans, allowing first-time borrowers to apply for a PPP loan and businesses that previously received PPP funds in the first round of loans to qualify for additional funding if they demonstrated specified reductions in gross receipts.

To receive a "second draw" of PPP funding, borrowers must:

• employ fewer than 300 people (or meet an alternative size standard),
• have used or will use the full amount of their first PPP loan, and
• demonstrate there was a 25% reduction from the gross receipts of the entity during at least one quarter in 2019 compared to the same quarter in 2020.

Borrowers may receive loan amounts of up to 2.5 times their average monthly payroll costs in the one year period prior to the loan date or the 2019 calendar year, but the second round of funding is capped at $2 million per borrower (rather than $10 million under the first round). The Act also made clear that group life, disability, vision, and dental insurance benefits may be included in calculating payroll costs.

Accommodation and Food Service Industry Adjustment: Borrowers in the accommodation and food service industry (NAICS code 72) are eligible to receive 3.5 times their average monthly payroll costs in the one year period prior to the loan date or the 2019 calendar year (capped at $2 million per borrower), provided borrowers with more than one physical location do not employ more than 300 employees per physical location (down from 500 employees per physical location in the first round of funding).

Seasonal Employer Loan Amount Calculation: For seasonal employers applying for a new PPP loan, the maximum loan amount is based on the average monthly payroll costs for a 12-week period selected by the employer that begins February 15, 2019 or March 1, 2019 and ends June 30, 2019. Or, the employer may elect to use any consecutive 12-week (any 96 consecutive days) period beginning after February 14, 2020 and ending before January 1, 2021 multiplied by 2.5, not to exceed $2 million.

Loan Forgiveness: Borrowers will receive full loan forgiveness if they spend a minimum of 60% of their second round PPP loan on payroll costs over a time period of their choosing between eight weeks and 24 weeks. As with the first round of funding, costs eligible for loan forgiveness include payroll, rent, covered mortgage interest, and interest. The Act also makes facility modification expenditures (such as drive-through window facilities and an expansion of additional indoor or outdoor business space), personal protective equipment, and operating costs for software and cloud computing services potentially covered. Publicly traded companies are not eligible for the new PPP loans.

Good Faith Certification: Importantly, although a borrower may technically qualify for the second round of PPP loan funding, borrowers will still need to certify in good faith, as set forth in the CARES Act, that the "uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations" of the borrower. This good faith certification may, in some cases, be more difficult for borrowers to make now than it was in early 2020, depending upon the borrower's financial performance in 2020. For the first round of PPP loans the Small Business Administration ("SBA") issued guidance that any borrower, together with its affiliates, that received PPP loans in an original principal amount of less than $2 million was automatically deemed to have made the required certification in good faith, but it is unclear whether that safe harbor will be applied to the second round of funding. Regulations carrying out the Act must be issued by the SBA within 10 days of the Act's enactment.

3. Simplified PPP Loan Forgiveness Application

The Act also creates a simplified forgiveness form for PPP loans of $150,000 or less, including those made during the first round of lending. Forgiveness will be granted if the recipient signs and submits to its lender a certification that is no more than one page, includes a description of the number of employees the recipient retained as a result of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. Recipients must retain records related to employment for four years and other records for three years. The SBA must create this form within 24 days after the Act's enactment.

4. PPP Loan Audits

Within 45 days of the Act, the SBA must submit to Congress an audit plan for conducting forgiveness rules and audits of PPP loans. This will be of interest to those borrowers who received a loan in excess of $2 million, and thus will be automatically subject to an SBA loan audit.

5. Entertainment Aid

Separate from the PPP program, $15 billion was earmarked for grants to live event operators or promoters, theatrical producers, live performing arts organization operators, cultural museums, movie theaters, and talent representatives. To receive a grant, the recipient must (among other requirements), have been fully operational on February 29, 2020, and have gross earned revenue during the first, second, third, or (with respect to applications submitted after January 1, 2021), fourth quarter of 2020 that demonstrates at least 25% percent reduction from the gross earned revenue during at least one of the same quarters in 2019. Entities that count in more than two of the following groups do not qualify for grants: publicly traded companies, multinational companies, companies that operate in more than 10 U.S. states, employ more than 500 full-time employees, or companies that receive at least 10% of its revenue from federal government sources.

6. Employment Implications

Under the Act, as of December 31, 2020, employers are no longer required to provide Emergency Paid Sick Leave or paid Emergency Family and Medical Leave under the Families First Coronavirus Response Act (FFCRA). However, covered employers can voluntarily provide this leave, and if they choose to do so, they can take the tax credit associated with this leave through March 31, 2021. With that said, all employers should still be mindful of other paid leave requirements under state and local laws, as well as their own paid leave and PTO policies. Many state and local governments enacted similar paid COVID-leave laws and ordinances to assist employees dealing with COVID-19, and while some of those laws also expire on December 31, 2020, some do not.

The Act also extends the Employee Retention Tax Credit—a refundable tax credit against certain employment taxes—to June 30, 2021 and increases the fully refundable portion of the qualified wages from 50% to 70%, meaning employers can receive a 70% credit on up to $10,000 of wages per employee per quarter.

We Can Help

Please contact Maslon's Corporate & Securities Group or Labor & Employment Group if you have questions or need assistance taking advantage of the relief provided under the Consolidated Appropriations Act, 2021.

To learn more or to register, go to: Minnesota State Bar Association practicelaw Conference.

Terri is passionate about helping businesses grow, succeed, and scale. As a strategic business attorney, she helps a vibrant network of entrepreneurial and dynamic businesses see the "forest through the trees."

Terri works directly with the business people who lead organizations, providing general counsel advice that is not only prompt and pragmatic, but also customized to fit the stage of the client's business. She is exceptionally skilled at negotiating and drafting multiple kinds of contracts, strategic partnerships, and joint ventures; developing and implementing exit strategies; advising on selling or buying companies and raising capital to recapitalize businesses; and coaching clients on complex governance matters. Terri works with clients in many industries, including manufacturing, technology, healthcare, consumer products, and professional services, bringing her experience in one industry to inform her advice in other industries. Terri is also a Qualified Rule 114 mediator and a Certified Exit Planning Advisor.

For more information or to register, go to: "Negotiating Contracts and Leases When the Unexpected Hits: a Conversation with LegalCORPS."

Marty has more than 35 years' experience advising public and privately held companies on securities and corporate matters. His practice is concentrated in securities and corporate finance, including public offerings, private placements, venture capital financings, and mergers and acquisitions involving public and private companies. Marty regularly advises public companies of all sizes regarding preparation of public reports and proxy statements, public disclosures, insider trading, securities regulatory compliance, corporate governance matters, executive compensation, and stock plan issues. He provides business legal services to privately held corporations, partnerships, and limited liability companies in all stages, from organization through their initial public offering or sale. He is also an active volunteer business attorney with LegalCORPS, providing pro bono business law advice, is a past president of the board of LegalCORPS from 2015-2017, and was named Volunteer of the Year in 2019.

Shane counsels clients on corporate matters, including mergers and assets acquisitions, contract issues, and corporate governance. With experience spanning a broad range of industries, he has particular depth advising closely held corporations to help them meet their goals throughout all stages of the business cycle—from corporate formation to the sale of the business. Shane is highly skilled at simplifying the complex for his clients—always with the goal of creating a clear actionable path to a meaningful solution.