Selling shares of your business in the event of a triggering event is an important legal issue that you should consider if you own a business. Types of buy-sell agreements include cross-purchase agreements, repurchase agreements, hybrid purchase and sale agreements, business purchase agreements, and asset purchase agreements. Purchase and sale agreements contain several essential sections and provisions that clarify how situations should be managed. Like most contracts, they have definitions, confirmations, etc. What makes them unique are the conditions for triggering events, payments, and evaluations. Using a purchase and sale agreement for your business has several key advantages. However, they largely protect the rights and privileges of all parties when executed correctly. You`ll get a better result if you hire in-house lawyers to draft and negotiate the deal on your behalf. When should a company have purchase contracts? The law firm Weisblatt regularly supports new and established entrepreneurs in purchase and sale agreements and other important contracts.
These important documents can improve ownership relationships and avoid disputes. If you would like to discuss any type of contract, please call the office at 713-352-0847 or contact us online for more information. If a co-owner wishes to buy back the interests of another co-owner, options are available that can be included in the contract. Even the most successful business may not be able to afford a 100% principal payment, so a buyback agreement may provide for a down payment of a quarter to a third of the buyback price, followed by equal payments over a period of three to five years at a reasonable interest rate. An owner`s disability or inability to work can harm a business in several ways. First, if the owner was an integral part of the company`s management, a sudden absence can disrupt operations. A purchase and sale contract may contain specific provisions aimed at maintaining business continuity despite changes in management. In addition, a power of attorney or family member may try to intervene and make business decisions for the incapacitated owner – even if they were not previously involved in the business. A purchase-sale agreement can ensure that ownership and management remain with the remaining co-owners. A provision for redemption in the event of incapacity for work may also benefit the unfit owner, since the purchase is a source of financing in which the owner is no longer able to work. To protect the future of our clients and their businesses, at the law firm Perry A.
Craft, PLLC, we provide assistance in drafting, negotiating and litigation of purchase/sale agreements. The company`s lead attorney and founder, Perry A. Craft, provides advice to clients throughout the process and creates clear buy/sell agreements aimed at avoiding disputes or disputes between owners, managers, partners, employees and directors later on. Since the valuation of a company or its shares can fluctuate over time, it is imperative that the buy/sell agreement be both clear in its meaning and thorough in the valuation of the company or its shares. This allows the owner and all parties interested in the purchase or sale to avoid subsequent disputes. If an owner dies, co-owners do not want to risk the owner leaving his share to his relatives as part of his estate or having his shares of ownership transferred under New York`s intestate inheritance laws. A purchase and sale contract may contain conditions that require the sale of the deceased owner`s shares to the corporation or co-owners. How the price is determined. In the agreement, you want to establish a methodology to determine the price. A word for the wise – a prefixed price is almost never a good idea! A lawyer can advise you on the different options so you can determine one that is right for your business and plans.
Another important condition of a purchase and sale contract is the establishment of a procedure to determine the purchase price to be paid for the shares or shares of the outgoing owner. Often, a buy-sell agreement comes into effect when an owner experiences a life event that affects their business interests. Such events may include: The law for small businesses is complicated. Legal mistakes, such as improperly negotiating terms and creating unenforceable documents, can cost you significant sums in the future. Hire in-house lawyers to make sure you draft a buy-sell agreement that suits your situation. .