Do You Know The Secret To Constructing Effective, Easily Followed, Buy Sell Agreements?
Clarity and simplicity create the most effective buy sell agreements. They need to be written in a way that they will be easy for both buyer and seller to understand. They are contracts and are legally binding. Much mischief can be created, and transactions frequently fall apart when either the buyer or seller don't really understand the intent of what has been written. And the mischief can lead to litigation.
Creating effective and simple buy sell agreements is easier said than done. In fact there is a real art to being able to write one that satisfies both requirements. Most are written by lawyers. Some result from negotiations between the lawyers representing each side of the transaction. In my opinion, the best result from negotiation directly between the buyer and seller, reaching agreement on the various points.
It takes great skill on the part of the lawyers involved to refrain from assuming too activist a role. They need to know when to make suggestions and when to remain silent. But the basic business terms of the transaction must result from agreements between your buyer and you.
Frequently buy sell agreements contain provisions for earn out or some other more complex arrangement. Recording exactly how this will work is an extremely critical part of creating these agreements. Again it requires special skill on the part of the lawyers involved. Before they can write these agreements, they need to understand the agreement reached. They may also need to offer relevant and appropriate legal advice.
Another valuable skill needed by writers of effective buy sell agreements is the ability to help you and the buyer overcome difficult obstacles, based on a solid understanding of what has worked for others. They need to be extremely knowledgeable in the area of buying and selling businesses.
At the risk of being repetitive, you don't want someone used to dealing in wills, divorces, and ordinary home conveyancing to write buy sell agreements for you. Look for someone with prior experience. Ask for references and check them. You want to be sure that other business sellers have been happy with the service provided, and that the transaction went smoothly.
You are probably familiar with the term "less is more". So it is with these kinds of agreements. One that effectively records the understanding reached in few words is usually better than one using twice as many words. Frequently lawyers/attorneys with less experience don't understand this as well as those with the confidence coming from significant relevant experience.
Remember the old story about a great writer who apologized to the person he addressed in writing for the length of his communication. His apology effectively said that he was sorry it was so long, but he was pressed for time and was unable to make it shorter. People in a hurry, or that are inexperienced, or unsure, tend to create long documents. You want to avoid consulting with them.
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