Legal Blog

M & A Nuggets: Sale to a Public Company

shutterstock_520921291If you are selling your business to a publicly traded company and part of the purchase price will be shares of stock in the purchaser, you should be aware of a few important issues, as follows:

  1. What is the track history of the value at which the shares of stock have traded? It is possible that the purchaser is a newly formed company and will have no trading history?
  2. Newly issued shares of stock in a public company are not automatically able to be sold on a public market. When will the shares of stock issued to you be able to be publicly traded?  When will the shares be registered?;
  3. When will you be able to sell the registered shares on a public market? There is typically a “lock-up” period during which a new stockholder may not sell shares of stock; and
  4. Are there any other restrictions applicable to the shares of stock? Those restrictions would be contained in the public company’s articles of incorporation and stockholders agreement.

By answering the above questions, you will be able to weigh what portion of the purchase price the purchaser’s shares of stock should constitute and negotiate the best possible scenario for you to be able to liquidate the shares of stock.

ABOUT GLENN D. SOLOMON

Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress.

 

 

 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

 

You can connect with Offit Kurman via our BlogFacebookTwitterGoogle+YouTube, and LinkedIn pages.  You can also sign up to receive Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.

 

MARYLAND | PENNSYLVANIA | VIRGINIA| NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC