19:02: First of all, when you talk about misclassifying or properly classifying, just to be clear, that refers to 1099 versus W-2 only. That’s the classification; it’s not like there’s anything else involved.

19:36: The way to diligence this would be to ask the seller for all of the contractors they work with, and then scrutinize the substance of the work—person by person.

21:40: And this was to your earlier point that all these little rules vary state by state, right?

22:12: If you go through your business buyer and find cases where people who have been 1099 should have been W-2, and you convert them to W-2s upon taking ownership of the business, are you still liable for the time they’ve been misclassified, or is that all you needed to do?

23:36: Someone’s asking, going back to your point, James David, that this 1099 structure can be common with salespeople. So, is that a misclassification that shouldn’t be happening, even though it’s a common practice?

24:38: But anyway, I don’t want to keep going on. I think the point here, maybe for the audience (correct me if I’m wrong, guys), is that it’s going to be pretty case-by-case. This is exactly the sort of work you’d want your attorneys to scrutinize, right?

30:07: What’s a Phase 1? Guys, what about Phase 2?

37:29: Yes, this is a particular case, but it’s pretty easy. The seller owns the building, and I’m looking at a deal where the seller owns the building. If I’m excluding the building from the deal and going to lease it from the seller, is a Phase 1 necessary in this case since the building’s not part of the deal?

38:03: This one doesn’t pertain so much to today’s presentation, but I think it could be helpful for a lot of people. Please discuss the legal mechanics of seller financing. How is that rate typically decided? Standby periods, and any other key features? This person is looking at a deal where the seller might be open to fully 50% seller financing.

42:59: Just before we move to the next question, James David, a bit on the forgivability of seller notes and why that can be a powerful lever.

44:40: How would that work, and why would you do that?

46:29: Maybe give us, as you did just on seller notes, James David, a very quick intro to reps and warranties and indemnities in the context of buying a business. Is that something you can explain in two minutes, or is it too big a question, too broad a topic?

53:49: A misconception or misunderstanding that we’re seeing in the questions is: What’s the difference between a forgivable seller note and an earn-out? They are actually quite materially different.

56:06: If I could take a stab at this, because I think I’ve heard it explained this way, which was helpful. Actually, there are two ways of thinking about this. A forgivable seller note is more about maintaining what’s been true in the past, whereas an earn-out is about incentivizing what could happen in the future or tying positive performance to an earn-out. Or, in other words, a forgivable seller note is about protecting downside, while an earn-out is incentivizing upside. Do you guys think those are fair frameworks to think about it?

57:29: There’s a question related to an episode of Acquiring Minds that aired. It’s actually been a year now, but the guest bought a contracting construction business here in Northern Virginia. The seller misrepresented a lot of things, and it went bad very quickly. Ultimately, there was a letter of confession involved, which just made it go from bad to worse, causing the buyer to lose everything—or at least everything in the deal. Can you tell us what that is and how it could have been avoided?

1:00:08: Why would anyone sign such a one-sided, irreversible document?

1:02:11: What you guys just said might be a little counterintuitive to people. The seller could be more aggressive than the big, scary bank. You know, banks don’t care, but they will work with you because they really want to resurrect the loan. They just want to get paid back.