Buy/Sell Agreements
Buy-Sell Agreement Process:
We assist owners in the creation of a term sheet for drafting a Buy-Sell Agreement designed to create liquidity between the partners of the business. This is often required in transactions as well as added to many small businesses that operate without one. Cathedral uses the following approach for the creation of a Buy/Sell Agreement:
- Assess: (this phase is required only if the Buy/Sell is not within a transaction)
- Review of the business and financials, including the investments of each owner.
- Prepare and Package:
- Create a recommendation package that includes an ownership strategy.
- A financial model assists in understanding the economic picture.
- Negotiate and Close:
- Present the financing package to the funder(s).
- Follow up with funder(s).
- Negotiate and Close.
- Ownership agreement is designed with a term sheet to resolve the following points:
- Triggering Events.
- Value.
- Pay-out.
- Review legal documentation of term sheet.
- Close the transaction.
| Case Study: In an ownership struggle of a private company, Cathedral uses the buy-sell agreement to clarify owner needs and aligns a go forward program. Two years later one of the owners exercised the rights in the agreement and was successfully bought out. |
