How to Search for Legal Entities

Nicholas J Price
5 min read

It’s a volatile time to be in business, and that volatility increases the bigger your business is. Although the economy is improving, it’s yet to come roaring back in the way that it was before the financial crisis. This is shown, for instance, in the trends of mergers and acquisitions (M&A) during 2018. While, according to Forbes, the first half of the last calendar year showed M&A activity of over $2.5 trillion, which surpasses similar high points in 2007 and 2015, the second half of 2018 was the worst six-month period on record, with less than $2.1 trillion exchanged in so-called “mega-deals” ($10 billion or more).

This insecurity reflects, on the one hand, powerful economic growth through the consolidation of businesses in similar lines of work: last year, CVS acquired Aetna health insurance, and a $67 billion deal between Express Scripts and Cigna shortly followed. On the other, the political trend toward economic nationalism continues to have effects on big M&A deals, with lawmakers of both of the main U.S. political parties expressing anti-trust concerns over the merger of cellphone carriers Sprint and T-Mobile, which has, at the point of this writing, dragged on longer than a year.

M&A, either intended or incipient, are the major reason for performing a legal entity search (LES). If you’re interested in extending your business into another line, or expanding the same business into a different jurisdiction, an LES is a handy way to find potential acquisitions, as well as competitors, in the field. This applies to small and medium-size business as well. Copyright infringement can carry large and unnecessary penalties, and it’ll happen to you if you don’t do your due diligence about corporate names in the state or country in which you want to open your business.

Unfortunately, there’s no one searchable database for every country that can tell you the names of entities toward this end. But this post provides a how-to for several major forms of gathering LES data and explains how a cohesive technology platform can cause your practice to excel.

Legal Entity Search in Individual U.S. States

When keeping track of the various entities that do business, each U.S. state tends to handle things a little differently. Although you can count on there being a searchable set of data to work with, they can require different kinds of inputs: not just names (or portions of names) but also types of registered entities, and sometimes even filing numbers. Similarly, the data produced by an LES in different individual states might be different: filing numbers, Employer Identification Numbers, agent names and addresses, mailing addresses, dates of incorporation and Internal Revenue Service filings should be there — but may or may not be, depending again on your search terms.

For instance, Delaware has long been considered the friendliest state in which to incorporate a business because of its strict protection of the corporate veil and its institutions for resolving business disputes. You might expect that because so many people choose to incorporate there, it would have a particularly robust system to do searches to find out which names are taken, and which entities are established. But in fact, the opposite is the case. Delaware actually has one of the most limited of all LES processes in that it requires you to pair a file number with each entity name. And adding a state in which you want to set up shop multiplies these difficulties. By the time you get to five or six different states, we’re talking about increasingly major headaches.

Overseas Legal Entity Search

This covers, so far, the needs of organizations specific to the United States. What about the needs of truly multinational businesses, which may choose to take advantage of lower corporate tax rates in other countries? Contrary to much of the current political discourse, this isn’t merely about greedy profit-shifting. Corporations that sell diverse products to different markets require laws that suit them in various manners to stay competitive. So, it’s not uncommon for a multinational founded in any one country to have more than half their assets overseas at any point in time.

If you thought U.S. state law on incorporation was uneven or complicated, then get ready for different national laws. There are, of course, paper directories compiled for most countries, usually by individual firms in that country, and a scale-up from this, various databases also organized by private entities according to varying geographic or political categorizations of entities. The latter are, of course, more powerful, but they also require a subscription — the cost of which can sometimes exceed the value of the information you’re trying to locate in the end.

Consider that in not all countries will electronic data strictly correspond to official, paper records. Consider also that an increasing share of multinational business is done in languages other than English and the entities you’re trying to find may not be strictly Anglophone either.

How Technology Can Facilitate Legal Entity Search

Although the potential for entity search can seem to be frustrated by the incredible variety of business and regulations operating on these various levels, fortunately technology has made these difficulties easier to navigate than ever before. There are databases, both free and paid, that help expedite these searches.

When it comes to overall entity management, Blueprint’s software platform has you covered. We’ll provide you with a dedicated support team to choose that suite of management tools that fits optimally with both your own internal structure and the ways in which you want to expand your organization. This allows your legal team to turn headaches into increasing and virtuous efficiencies and synergies across your various operations. With us, you’ll file on time wherever you do business, your structure will remain clear across all jurisdictions and you’ll obtain the absolute best-in-class entity management outcomes. Please call or email us today to discuss our solutions.