Sale Of Equity Agreement

The terms of sale are at the heart of the sales and sales contract. You define: A contract to buy and sell shares is an agreement for the sale and purchase of a number of shares declared at an agreed price. The shareholder who sells his shares is the seller and the party that buys the shares is the buyer. This agreement specifies the terms of sale and purchase of the shares. In addition, in the event of a share sale, a buyer does not have the advantage of tax-rewriting assets acquired at fair market value and possibly losing some of the tax amortization available to cover future income. Given the above, buyers are sometimes attracted to the sale of assets rather than to the sale of shares, as there is less attention to undisclosed liabilities and better tax treatment. On the other hand, a seller can get better if he sells shares after taxes. A smart seller should always ask a potential buyer to make an offer for both an asset sale and a share sale and choose the offer that will provide the largest after-tax cash product. If the buyer is a private equity fund, family office or other private investment group, he or she is referred to as a “financial” buyer. A financial buyer will generally strive to achieve an investment objective by participating in the target, which will generally be over a period of five to seven years. However, there are certain debts that a buyer may not be able to avoid, even if the sales and sale contract provides that the buyer does not take care of them. The terms of sale then specify how the buyer will pay the seller.

The purchase price can be paid in full in cash, but it is more likely to be paid with a combination of cash (at closing) and seller financing. In this case, the buyer gives the seller a debt ticket for part of the purchase price. Buyers like stock sales because they are easier to change after the transaction. The company remains the same without significant final closure configuration requirements. However, since the purchaser acquires all of the entity`s debts, including undisclosed or potential liabilities, the purchaser must perform additional diligence to detect .B of these potential liabilities (e.g., ongoing litigation, security obligations or tax revaluations). After the conclusion of the sales contract, the sales contract remains an important reference document, as it covers the operation of a possible contract and contains restrictive agreements, confidential commitments, guarantees and compensation, all of which can remain very relevant.