Share Sale Agreements
A share sale agreement often occurs when the shares of a business are being sold. The agreement means that the buyer gains control of the shares being purchased and usually therefore ownership of the business (dependent upon the number of shares being purchased). The buyer would then continue to operate the business with the existing employees, premises, contracts and clients and any debt that the company previously had.
At P.A Duffy & Co Solicitors, we represent shareholders in businesses across Northern Ireland. Our commercial team are experienced, understanding and diligent and will work tirelessly on your behalf to secure your desired outcome.
Key elements typically covered in a share sale agreement include:
Identification of Parties: The agreement should clearly identify the parties involved, including the buyer and the seller.
Shares Being Sold: It specifies the number and class of shares being sold. This may include information on preferred shares, common shares, or other classes of shares.
Purchase Price: The price at which the shares are being sold is detailed, along with the terms of payment, such as whether it will be paid in cash, instalments, or a combination of cash and other forms of consideration.
Conditions Precedent: The agreement may specify conditions that must be met before the sale can be completed. This can include regulatory approvals, financing arrangements, or other specific conditions.
Covenants: The agreement may include covenants or promises that both parties agree to follow before, during, and after the transaction. For example, there may be non-compete or confidentiality clauses.
Warranties: Warranties are included to address the parties' responsibilities in case of any breaches of the agreement or any resulting losses.
Dispute Resolution: Share sale agreements often include provisions for dispute resolution, such as mediation, arbitration, or litigation procedures to address disagreements or conflicts between the parties.
Confidentiality: To protect sensitive information about the company, confidentiality clauses may be included to restrict the parties from disclosing or using confidential information for unauthorized purposes.
What is the primary purpose of a share sale agreement?
The primary purpose of a share sale agreement is to define the terms and conditions of the share sale, including the purchase price, representations and warranties, and other important details. It aims to protect the interests of both the buyer and the seller.
What is due diligence in the context of a share sale agreement?
Due diligence involves a comprehensive review of the company's financial, legal, operational, and other relevant aspects to assess its condition and risks. Both the buyer and the seller typically engage in due diligence before entering into a share sale agreement.
Why should I involve a solicitor when drafting a share sale agreement?
In summary, a solicitor plays a crucial role in ensuring that your share sale agreement is legally sound, meets your objectives, and protects your interests throughout the transaction. The involvement of a legal professional is essential to minimise legal risks, avoid potential disputes, and navigate the complex legal and regulatory aspects of the share sale.
How can I finance a share sale agreement?
We know that funding a share sale agreement might be a worry, so we offer a range of options. These include:
• Legal expenses cover
• After the Event insurance (ATE insurance)
• Private payment
Our first consultation is free, and we will be happy to discuss funding with you to find the best option for your circumstances.
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