Best Practices for Drafting Buy-Sell Agreements Among Shareholders or Members
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Learn about the complexities of preparing and drafting successful buy-sell agreements and how to avoid common mistakes.
Every closely held entity (corporate, LLC, or partnership) that has more than one owner should have a buy-sell agreement. This document establishes the ground rules for determining when a shareholder or member can sell her shares, when she must sell her shares, and when she can require another shareholder or member to sell its shares. Valuation issues, successorship issues, governance issues, funding issues, change-in-control issues, even confidentiality and noncompete issues can all be addressed in a single document. Learn about the opportunities, and perils, inherent in a document that is too often treated as a fill-in-the-blanks form, if it is considered at all, from a member of the ABA Section of Business Law's committee drafting a model shareholder agreement.
Speaker: Mark R. High
Program Topics:
Conflicts Issues
- How Many Hats Can You Wear?
- Solutions, Both Theoretical and Practical
Purposes
- Control Ownership
- Anticipate Transition Events
- Establish Valuation Methods
- Allocate Control
Restricting Transfers/Permitting Transfers
- Individual vs. Entity Owners
- Death or Disability
- Third Party Transfers
- Owners as Employees
- Special Situations
- Addressing Transfer Restrictions in Company Sales
Valuation and Mechanics
- Formula vs. Appraisals vs. Agreement
- Who Buys and Who Sells?
- Mandatory vs. Permissible
- Rights of First Refusal
- Payment Provisions
Funding a Buy-out
- Buyer-Financed
- Seller-Financed
- Using Insurance and Cross-Insurance Provisions
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