Legal Blog

In a stock purchase, a selling company with many owners can result in administrative headaches to a purchaser.  The purchase price will need to be divided among the many owners.  If the purchase price is paid over time, the allocation and distribution of the price must be calculated each time a payment is made.  Selling owners are usually required to indemnify the purchaser.  The purchase agreement should contain a provision stating how notice of any indemnity claim should be provided to each selling owner.  So notice would have to be provided to all owners.  A solution to these headaches is to require the sellers to designate one person as the sellers' representative to both receive the purchase price payments (and be responsible for distributing the payments among the owners) and to receive claim notices on behalf of all the owners.  Typically the majority owner, if there is one, acts as a sellers' representative.  By using this concept of a sellers' representative, a purchaser can shift the burden of dealing with many owners to the seller representative.

 

 

 

 

 

If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.

 

ABOUT GLENN D. SOLOMON

Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring 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.

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