After a long day on the drawing board, Daffy Duck and Bugs Bunny go out for a few drinks at a local bar. Daffy says to Bugs, “Hey, Bugs, we’ve been bustin’ each others chops for decades…I’m tired of chasing you around.” Bugs responds, “What are you getting at Daffy?” Daffy replies, “Why don’t we break away from Warner Brothers and do something more exciting and challenging like running our own company?” Bugs exclaims, “You’re looney, Daffy! We don’t know the first thing about owning a company.” Daffy goes into a long discourse during which he reveals that he has been running an internet advertising company, called “Wacky Advertising, Inc.” (a S-Corp.) for the past three years. He explains that after two years of losses, Wacky Advertising reached profitability in 1998, with net income of $1.5 million on $18 million in revenues.

Daffy is looking to improve Wacky Advertising’s market share and wants the company to be able to compete with the industry’s leader, Doubleclick. However, Daffy’s looney cartoon adventures over the past 30 years have not been lucrative enough for him or Bugs to provide the capital necessary to help the company become a leader in the internet advertising business.

Bugs and Daffy are not sure how they should go about raising more capital to achieve Wacky’s objectives or how their future capital structure might affect its corporate structure. However, during the course of their conversations, several concerns arise, which may make their decision on how to raise capital easier. Daffy does not want the company to be brought out in the future. He is also worried that if the company’s prospects improve as a result of the influx of capital, it may draw more attention to him and Bugs. After all their years of fame, Bugs and Daffy want to live a more private life and do not want their fortunes disclosed to the public. However, both Daffy and Bugs are concerned about future liability for certain corporate activities and would like to limit their potential exposure. Bugs also wondered whether the company would be able to raise additional funds in the future.

Bono from U2 overhears Bugs and Daffy’s conversation. He remembers the great time he had in Pembroke recently as well as this great group of students in Dr. Lakatos’ Commercial Law class who have expertise in the areas of business organizations and intellectual property. As such, Bono refers the two looney characters to you for advice in light of their concerns above.

“That’s All Folks!” – Have an Awesome Day!!!!!

Required:

Write a memorandum on the information given them business advice on what they should do about how to start the corporation and found a solution to help them get over there certain concerns about starting a business. Which type of entity should they start whether or what is the entity to choose to have low liability's?