When I talk with business owners about buy-sell agreements, I sometimes get strange looks when I name clauses they have or don`t have in their agreements. The owner might say, “If we have already entered into a sales contract, why do you call it “wait”? Or: “What do you think I might want a drag-along rule? The terms “no-sell buy-sell” to “Texas shoot-out” may sound funny, but they deal with the serious aspects of exit planning. For example, It is assumed that John and Mary have a 50/50 partnership in a furniture factory in the city. The net assets of his project is 5 million R. John wants to leave the company because of the ongoing conflict with Maria. Fortunately, they had included a “Texas Shoot Out” clause in their original agreement. There are many other provisions that can be used in a repurchase agreement to anticipate future contingencies. Fortunately, most of them have many more mundane names. The fact is that a buy-sell contract should be unique in the circumstances of the company and its owners. You can help your exit planning team by bringing the owners together and asking “what if.” The legal conditions that flow from it in the agreement may have amusing names, but they can provide effective results. As a general rule, an exit clause is triggered in situations where a commercial partnership has deteriorated significantly and, therefore, the situation is often compared to a divorce. Just as long struggles between a couple of divided children can often emotionally damage a business can be harmed by long struggles between its owners. This is why experts in this field stress the importance of including an exit clause in a company`s shareholder contract in order to minimize the negative effects of a company decision.
As in the case of a marital agreement, it is important to define an exit clause in a business relationship at an early stage, when interests are always oriented and partners still love each other. Wait: We look at hundreds of sales agreements in one year, and many of these agreements have wait-and-see provisions. While this provision may seem like a glorified hesitation, the main advantage of this approach is that it binds contractors to a sale while deferring the decision to make the sale. Suppose three equal owners of a business want to be bound by a sales contract in the event of an owner`s death, but they are not decided on which method will be the most tax-smart for them. Should the company buy back the shares of the scammer, or should the other owners? A typical Wait-and-See buy-sell would indicate that after the death of the shareholder, the company has the first option to purchase some or all of the share; The surviving partners will then have the next option. and the company is then obliged to buy the remaining stock as long as there are still shares.