This article are provided for information purposes only, and are not intended as legal advice.

What do you include in a buy sell agreement?

February 25th, 2009

A buy sell agreement should be customized to your particular business but you should talk about the following topics in your buy sell agreement:

  • trigger mechanism, how much time do you give the other side to respond,
  • how long until closing
  • location of where notice is to be provided
  • is there a formula included in the buy sell agreement or just the person receiving has the opportunity to match the price
  • what happens to the retained earnings, are they distributed in advance of closing?
  • what happens to shareholder loans?
  • what happens if there is a balance due to shareholder?
  • what happens if there is insufficient cash in company to pay out these balances, are there terms, security?
  • what happens to bank guarantees
  • what happens to any other guarantees i.e. if there is a lease
  • what happens if there are multiple companies and one includes real estate?
  • what happens if the buy cannot remove you from the guarantees, will the transaction close?
  • what happens to the business between the time the buy sell agreement is triggered until closing?  who is running the business, what cheques can be issued particularly if the person running the business is leaving.

These are just some of the items which you should consider in the buy sell agreement.

Filed under: Buy sell agreements — Gary Landa @ 10:47 am

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