Sale of minority or majority stake in private company, price in
cash, assumed loan will be part of package; penalty if first
year profit fails; full warranties
About this document
This is a share sale agreement of a minority or majority stake in a private company. It is suitable for selling / buying a minority or majority stake in a company. This authoritative document can be used for high value transactions and any sort of business. Note that the type of business is generally of low importance. You can use this template to buy into a trout hatchery or an architect’s practice.
This share sale agreement is suited to any individual or company selling or buying a stake in a company. It is usual for the buyer to produce the sale document but there is no reason why the seller should not obtain an advantage by making the document his and thereby obtaining the advantage of preliminary editing in his favour.
This document enables a buyer to decide how tough he wants to be and who he wants to bind. As drawn, the document binds all the shareholders, not just those selling, but politics may require warranties to be given only by those departing.
It is also useful for a seller of shares wanting tips and hints as to what is fair and reasonable in a document comparable to the one now presented to him by the buyer or his solicitors.
We have drawn the document so that the price is in cash, new shares are to be issued, and the assumed loan will be part of the package. We have also provided for a penalty if first year profits fail. Of course full warranties are included.
We have documents for the purchase all shares in a company alternative documents are linked right. We also have documents for business sales.
A word about warranties: Warranties protect the interest of the buyer, who does not have the information available to the seller. It is fair and reasonable for a buyer to demand warranties and for a seller to give them. However, it is quite easy for a buyer to use warranties to “improve” his original deal. So, if you are a seller . . . . do not give a warranty if you do not know whether it is true, but do be prepared to “go and find out” information that could be within your knowledge.
140 warranties sounds an awful lot. Do you really need them? Will you understand them. Net Lawman advises: absolutely yes and absolutely yes! Our warranties are written in plain English. A seller should start with a full set unless he is sure he knows everything there is to know about his proposed acquisition, or the value is very small, or the company is not trading.
Net Lawman document templates offer around 150 “full” warranties, or a reduced set of around 115. Either way, around 30 cover real property, so if your company has none, the number comes down.
Why you need such a long document: Our job is to protect the buyer or seller, not to make decisions about what you do or do not need in your contract. You can delete anything which does not suit your transaction.
This document assumes a buyer is buying perhaps 20% to 60% of the shares. He may also be arranging a loan facility or otherwise supporting the company (these other arrangements are not covered in this document, but Net Lawman can supply a loan document, shareholders’ agreement and directors’ service contracts). It is assumed that the Buyer wants the same level of protection as he would expect if he was buying the whole company. In this agreement, the warranties are given not only by the sellers of shares but also by those “staying in”.
Application
and features
Suitable for any type of trade or business
Extensive use of warranties encourages full disclosure by the sellers and the ongoing shareholders
Drawn for the deal to be completed on the same day, not at some future time
Suitable for a single company of any size
Suitable provisions for contract to cover leasehold, freehold and tenanted property
Up to 150 individual warranties where required
Retention up to one year against reduction in forecast profit and warranty claims
Rrovision for some sellers to be trustees and not therefore bound by the warranties
Provides a complete framework.
Contents
Agreement for sale
Purchase price and how made up
New shares to be issued to buyer
Calculation of minimum profit
Completion of the deal and delivery of documents
Warranties applicability
The Warranties;
Trustees limited Warranties
Restrictive agreement to prevent Sellers from competing afresh
Sellers protection provisions
Various legal provisions usual in a document of this type
Existing shareholdings
Details of the company
The warranties
Particulars of the properties
Pension arrangements
Other necessary legal provisions.
Word
Count (approximate):
Document: 7700
words
Explanatory notes:
3000
words
Draftsman
This document is drawn and maintained by Net Lawman. It is real law in plain English.
