When business is good, an acquisition lures the prospect of moving your company to the next level. But even veteran dealmakers sometimes overlook critical elements that can derail the best intentions. The following are five elements that should always be considered in an acquisition:

1. Preparation – Whether the target company is a competitor or a complement, take a step back and ask if it truly fits the strategic direction of your business. Too many deals are made on emotion. Before talking numbers, develop a business plan that details how the new company will merge with yours. Be sure to list the pros and cons. Most importantly, make sure the executive team and your board of directors have a clear strategic acquisition plan in place on an annual basis.
2. Communications – Seek outside perspectives and lean on advisors for constructive feedback. Good ones can be objective without internal blinders. This can include consultants, attorneys, accountants, IT, operations, sales managers, suppliers and strategic partners. Ensure that your executive team is fully engaged.
3. Finance planning – Before determining the best way to finance the deal, develop a post-integration forecast and PandL. Cash and equity are not always the preferred method of payments. Debt from a multitude of sources can carry significant tax and cash-flow benefits. Leverage financial, legal and tax advisors for alternative strategies.
4. Finding synergy – Before the deal closes, develop a six-month integration plan that uncovers as many efficiencies as possible. Too often, newly acquired companies trudge on in a perpetual silo without revealing the many opportunities they present. This includes shared resources, supply chain, operational efficiencies and workforce integration.
5. Create an audit – A year after the deal, take a critical look at the entire process. This provides a second chance to uncover additional efficiencies that were not initially apparent. It also identifies critical lessons and the ability to improve the process during your next deal. Done well, there will be a next deal.

A recent federal circuit court decision clarifies that Ohio business owners have the right to protect their private business records from state inspection in the absence of a search warrant. That’s despite statutory provisions purporting to allow warrantless searches.

Liberty Coins LLC, et al., v. David Goodman et. al. (6th Cir. 2018) involved a constitutional challenge to four provisions of the Ohio Precious Metals Dealers Act. The act authorizes warrantless administrative searches of certain records and information kept by precious metals dealers (both licensed and unlicensed). Two precious metal dealers challenged the act on the grounds that it violated their right to be secure from unreasonable searches and seizures as protected by the Fourth Amendment.

The U.S. Court of Appeals for the Sixth Circuit reviewed the act and concluded that the portions of the act that were necessary to deterring criminal activity in the precious metals industry, and which were part of a predictable and guided regulatory presence, were constitutional. However, those provisions that broadly authorized the government to “investigate the businesses” of precious metals dealers violated the Fourth Amendment of the U.S. Constitution and were therefore unconstitutional.

Liberty Coins is instructive to local and state governments as well as private business owners and entities operating in any “closely regulated” industry. Laws authorizing warrantless searches in these industries must meet a three-part test in order to comply with the Fourth Amendment: (1) there must be a substantial government interest that informs the law; (2) inspections must be necessary to further the law; and (3) the law, in terms of certainty and regularity of its application, must provide a constitutionally adequate substitute for a warrant. Laws that fail to meet any part of this test will be subject to constitutional challenge under the Fourth Amendment.

If the government is looking to review your business records without a warrant, or you are a government entity seeking to enhance its regulatory efforts in a particular industry, it is wise to consult with legal counsel to ensure compliance with the Fourth Amendment. If you have any questions about Liberty Coins or any other administrative or regulatory regimes, the public law attorneys at Walter | Haverfield are available to assist you.

Ben Chojnacki is an attorney at Walter | Haverfield who focuses his practice on public law, litigation and sports law. He can be reached at bchojnacki@walterhav.com or at 216-619-7850.

The decision to legalize medical marijuana in Ohio represents an incredible business opportunity for Ohioans. But not everyone who applies for a medical marijuana processing or retail dispensing license in this highly competitive industry will be successful.

To succeed, one must have a sound business plan and enough lead time to properly execute it. Applicants will also need to be well capitalized with a strong (and patient) investor base. Keep in mind that traditional lenders, such as banks, have still not entered the arena because medical marijuana, while legal in the state of Ohio, is still considered illegal under federal law.

Applicants will also need to have identified and obtained local approval for a location (real estate) from which they will operate the marijuana processing or dispensary operations. This can be a difficult task because no medical marijuana processor or retail dispensary may be located within 500 feet of a school, church, public library, public playground, or public park.

The medical marijuana business is not for those who are risk-adverse, nor is it suited for procrastinators. The $10,000 processor application fee and the $5,000 retail dispensary fee are non-refundable. It takes time and a considerable amount of effort to prepare an application that will be seen by the state of Ohio as a viable candidate for a medical marijuana processing or dispensing license. Competition is expected to be fierce based on the number of applications that were received for the medical marijuana cultivation licenses earlier this year.

In addition to the non-refundable application fees, potential applicants can expect to incur legal and other advisory fees. The cost to bring in third-party advisors, however, will likely prove to be a wise investment as most applicants will need to rely on their expertise to help navigate the myriad restrictions and requirements.

With the large number of applicants expected, only the best applications will be considered. The state is looking for applicants who are well-capitalized, responsible and reliable, since license holders will be tasked with the responsibility to provide medicine to what is expected to be a large patient base in Ohio.

In order to assist would-be applicants to optimize their chances for securing a license or to help prospects determine whether it makes sense to pursue this one-of-a-kind business opportunity, Walter | Haverfield has teamed up with other cannabis industry professionals to host a free educational seminar on Thursday, Oct. 5. Among other things, the seminar will cover: important deadlines and requirements for application; zoning restrictions; risk management and insurance options; security requirements; tax consequences; and tips for raising the necessary capital.

This seminar provides an opportunity to connect with a wide array of professionals to get the answers you need before you make the decision to pursue a medical marijuana processing or dispensing license. You can register for the free seminar by visiting www.walterhav.com.

Kevin Patrick Murphy is a partner and chair of Walter | Haverfield’s Corporate Transactions practice group.

This article was published in Crain’s Cleveland Business on October 3, 2017.