MERGERS & ACQUISITIONS - CORPORATE
Strategic legal support when engaged in a corporate buy-out.
Businesses are constantly evolving, although not
always for the better. Whereas the original vision and leadership may
have worked well during the business' early years, as the company
evolves and the market shifts, the corporate dynamics undergo
significant changes. The same holds true for the personalities involved
in the ownership and leadership of the company. For with time, personal
aspirations and motivations change, as do friendships and family
influences. As such, corporate changes are relatively common and often
require a drastic shift in the leadership and ownership of the company.
To facilitate these business changes, it is often necessary to
initiate corporate buy-out procedures. Undertaking a buy-out of the
other owners / shareholders / partners, greatly benefits from the
existance of a shareholders' agreement or partnership agreement. But
even in the absecnce of such written arrangements, negotiating a
buy-out is preferable to allowing you and/or the company to continue
suffer, on a variety of angles (financially, expansion, emotionally,
Buy-outs in corporate agreements (whether a shareholders' agreement
or partnership agreement) are generally structured in one of two
forms: a 'shot gun' arrangement or put-call provisions.
The shot gun arrangement requires one one shareholder / partner (the
"initiating party") to put forth an irrevocable purchase offer to
the other shareholder(s) / partner(s), setting forth the exact
dollar amount for which they seek to buy-out the other side. The
other side has the option of either countering the offer by buying
the initiating party's shares at the buy-out price or selling their
shares at the buy-out price. Either way the sale is going to happen.
The other common buy-out arrangement is the put-call. The put arises
where the shareholders / partners are allowed to force the
acquisition of their shares by the other shareholders / partners
(generally with a mark-down and paid over a period of time). The
call arises where a shareholder / partner seeks to acquire his
fellow shareholders / partners interest in the company (generally
with a mark-up and paid out immediately). As with the shot gun
arrangement, the put-call arrangement is designed to force a
conclusive buy-out, if initiated and followed through.
However, it should be noted these buy-out arrangements are intended
to be default provisions, such that the parties to the agreement are
able to negotiate alternate terms that are more suited to their
particular circumstances. However, in the event that those
negotiations fail, the fall back is the written buy-out arrangements
that will require the other side to proceed to completion if they
are initiated and pursued.
For knowledgeable and experienced legal
representation in advancing your business' commercial operations,
including the structuring of buy-out arrangements in shareholders'
agreements and partnership agreements, together with managing the legal
side of corporate buy-outs once initiated (or contemplated), contact
corporate buy-out lawyer
Christopher Neufeld at 416-887-9702 / 403-400-4092 or