937-203-0771 
At Launch Dayton Startup Week in September, 57 experts shared insights to help Dayton’s entrepreneurs move their businesses forward. Among them was Tom Whalen, a shareholder at Dayton-based law firm Sebaly Shillito + Dyer (SS+D), who led a session on common legal risks and how founders can avoid them. Below is a summary of Tom’s key takeaways.
Entity Selection
One of the very first decisions a founder makes is choosing a legal entity. That choice affects governance, taxes, liability, and future growth.
- LLC – Often the most common starting point for small businesses. Pros: Simple to set up, liability protection, flexible governance. Cons: Potentially unattractive to equity investors due to non-uniform governance rules and partnership taxation.
- C-Corporation – Common for companies planning to raise outside capital. Pros: Standardized governance structure, favorable tax treatment for certain investors. Cons: Increased complexity, compliance requirements, and administrative costs.
Tom’s advice: “Keep it simple.” Focus on what you need today and avoid overengineering your structure too early.
Governance
Governance is a critical but often underappreciated part of building a business. It establishes how decisions are made today and how future issues will be handled among partners and owners.
A key example is a buy-sell agreement, which outlines what happens in situations like death, disability, divorce, or underperformance. Without a clear, pre-defined agreement, these events can quickly lead to conflict, costly litigation, and damaged relationships. In some cases, they can irreparably harm the business itself.
Tom’s advice: Maintain flexibility and do not overcomplicate things early on. As partners and investors are added, address governance decisions thoughtfully and incrementally.
Investment
Many founders assume raising capital is a prerequisite to starting a business, but that is not always true. When outside investment is necessary, it is critical to work with legal counsel experienced in securities law. Investment comes with complex terms, structures, and industry norms, and founders should approach it with care. You are selling a piece of your business.
As fundraising approaches, founders should also prepare a well-organized data room containing key legal and company documents. This streamlines investor diligence and builds confidence.
Tom’s advice: Fundraising is full of hazards, and misaligned expectations can derail deals early. Get experienced legal help early in the process, from an attorney you trust.
Maximizing Enterprise Value
Delivering a great product or service and running a profitable business are essential, but they are not the only drivers of enterprise value. Two often overlooked areas are especially critical:
- Intellectual Property – Is your product or service novel, and is it protected through patents, trademarks, copyrights, and internal controls? Poor intellectual property management can allow others to duplicate your work and erode your value.
- Contracts – Handshake deals only go so far. Just as governance defines internal rules, contracts define expectations with customers, vendors, and partners.
Laws governing contracts and intellectual property can vary by state, so experienced legal guidance is essential at every stage.
Tom’s advice: “Run your business like you will own it forever. Operate it like you will sell it tomorrow.”
Tom is one of the most active startup attorneys in the region and a trusted advisor to dozens of Entrepreneurs’ Center clients, from early-stage founders to companies completing eight-figure capital raises. Learn more about Tom and Sebaly Shillito + Dyer.
