Photo of Mark J. Tarallo

Mark J. Tarallo is a member of the Business & Finance Department, and Mergers & Acquisitions and Entrepreneur practice groups.

Mark represents entities ranging from startups to publicly listed international businesses. He works closely with clients to negotiate, draft and review all documents in connection with venture capital financing, mergers & acquisitions, and securities offerings.

Additionally, Mark advises clients on general corporate matters including securities, governance, intellectual property, licensing, employment and litigation. He also assists clients such as private funds and investment advisers in connection with regulatory and securities matters.

As we move into 2020, there are signs that the M&A market may be slowing down.  Global trade issues, rising prices for target companies, and political uncertainty in the US all may contribute to reduced deal activity in the coming year.  In this type of market, acquirers will take a harder look at potential acquisitions in order to minimize risk. Both strategic and financial buyers will be focused on buying “quality” companies, where potential risks are minimized through good practices of the sellers.
Continue Reading

Companies that are considering an M&A transaction should review their insurance policies to determine whether the carrier needs to be notified of the potential transaction.  In some cases, failure to do so can cost the insured the coverage that it was expecting.  In a case out of California (Scottsdale Insurance Co. v. CSC Agility Platform, Inc., C.D. Cal, Feb 4, 2019), the U.S. District Court for the Central District of California held that an insured’s failure to notify its insurer of a pending transaction allowed the insurer to deny coverage when an otherwise covered claim arose.
Continue Reading

Very often, tax consequences determine how successful the sale of a business ultimately is.  Owners often focus only on top line price, while structure and tax treatment can make a significant impact on how much of the purchase price the owner ultimately retains.  Asset sales, while attractive to buyers because they allow for a “step up” in the basis of the assets up to the amount of the purchase price (enabling the buyer to take increased depreciation and amortization deductions), often create problems for owners.  Because the seller in an asset sale is typically an entity, the sale proceeds have to pass into the entity and then out to the owners.  This makes the sale proceeds subject to a double tax where the seller is a C corporation, an S corporation with earnings and profits, or an S corporation subject to the built in gains tax.  In addition, certain state taxes, such as the Massachusetts “Sting Tax” may apply, further decreasing the net sale proceeds to the owners.
Continue Reading

Many family-owned enterprises do business with the Federal government, either as a contractor or a supplier.  A recent case decided in the Court of Federal Claims serves as a stark reminder that any time a contract with the Federal government is amended or modified, the parties must pay particular attention to any release language contained in the amendment, or they run the risk of releasing potential claims that are unrelated to the modification.  
Continue Reading

On August 10, 2018, Massachusetts Governor Charlie Baker signed into law a piece of legislation entitled “An Act Relative to Economic Development in the Commonwealth.”  This new legislation brings long-awaited non-compete reform to Massachusetts, and lays out some new guidelines for business owners to consider when determining whether or not to require employees to sign true non-compete agreements that would prohibit a departing employee from engaging in competitive activities. 
Continue Reading

As the M&A market stays active, more and more family-owned businesses are selling to third parties. Many of these transactions involve sophisticated buyers, who spend a lot of time, money and effort on due diligence of a seller.  While there are many elements that go into a successful sale of a business, sellers can take a few steps prior to starting on the sale process to help ensure smoother negotiations (and hopefully a smooth transaction).
Continue Reading

Many operating businesses in Massachusetts are set up as limited liability companies rather than corporations. Limited liability companies can engage in many of the same activities as corporations, including participating in M&A transactions as both buyers and sellers.  The rights of members in LLC’s engaging in such transaction are set forth in M.G.L. c. 156C, the Massachusetts Limited Liability Company Act (the “Act”).  Generally, a member in a Massachusetts limited liability company who dissents from a merger has limited rights under Section 60 (b) of the Act, to resign and receive the distributions owed in respect of the member’s interest  ( “The exclusive remedy of a member of a domestic limited liability company, which has voted to consolidate or to merge with another entity under the provisions of [the Act], who objects to such consolidation or merger, shall be the right to resign as a member and to receive any distribution with respect to his limited liability company interest, as provided in sections thirty-one to thirty-seven, inclusive.”)
Continue Reading

In a recent decision, the Massachusetts Supreme Judicial Court ruled that governmental entities have great flexibility to terminate agreements with contractors where the agreement includes a “termination for convenience” provision. Many family-owned enterprises do business with the Commonwealth of Massachusetts or other governmental entities, and should be aware that the parties to those arrangements will have greater freedom to terminate these arrangements as a result of this decision.
Continue Reading

Many family businesses run smoothly for years, until the business is sold or passed on to the next generation(s).  There are, however, those circumstances where the family or closely-held business runs into a deadlock among management where the parties are unable to agree on a course of action to move the business forward.  In these circumstances, one party can petition the appropriate court for a judicial dissolution of the business.  The other party may be opposed to this prospect, but can do little other than defend the claim or try to work out a solution with the party filing suit.  Owners of family or closely-held businesses should be familiar with the applicable judicial dissolution standards  and should try to include language in a shareholder agreement or operating agreement to avoid this problem, especially where management and stockholdings are divided 50/50.  An ongoing deadlock can be severely damaging to a business, taking time, attention and funding away from other matters.
Continue Reading

As 2018 looks to be a favorable M&A environment, many business owners may come to the conclusion that it is time to sell the family business.  While it is true that some businesses sell as a result of an offer that comes “out of the blue,” the reality is that most sales occur as a result of a well-designed process intended to maximize value for the seller.  Sellers should consider allocating considerable time preparing for a sale, sometimes as much as a year.  A well-run sale process can take considerable time as well.  The time is well-spent though, as thorough preparation and an organized sale process typically lead to higher valuations and quality buyers. 
Continue Reading