A buy-sell agreement is an agreement between the owners of the business for purchase of each others interest in the business. Such an agreement will spell out the terms governing sale of company stock to an outsider and thus protect control of the company. It can be triggered in the event of the owner's death, disability, retirement, withdrawal from the business or other events. Life insurance owned by the corporation is often used to provide the funds to purchase the shares of a closely held company if one of the owners dies.
The time to prevent disputes is before they occur. Experience proves that owners anxieties created in dealing with one another are inversely proportional to the effort they spend addressing business problems in the event that they should happen. Dealing with these contingencies before they manifest themselves is the secret to a harmonious business relationship with other owners, Use the checklist below to determine areas where you may need assistance.
A buy/sell agreement is a legally binding contract that outlines the terms and conditions of buying or selling a business or its assets. In New Mexico, there are specific checklists and contingencies that buyers and sellers need to consider ensuring a smooth transaction. Here are the key points to keep in mind when dealing with New Mexico checklist — buy/sell agreement— - contingencies: 1. Purchase Price: The agreement should clearly state the agreed-upon purchase price for the business or assets being sold in New Mexico. It should also mention any adjustments or allocation of the purchase price between tangible and intangible assets. 2. Payment Terms: The payment terms, including the initial deposit, installment options, or any potential financing arrangements, should be clearly stated in the agreement. In some cases, parties may agree upon an earn-out provision, allowing a portion of the purchase price to be contingent on future business performance. 3. Contingencies: Contingencies play a crucial role in New Mexico buy/sell agreements, providing protection for both parties. Some common contingencies may include securing financing, obtaining necessary regulatory approvals, completion of due diligence, or satisfactory performance of the business. 4. Due Diligence: The buyer should have the opportunity to conduct thorough due diligence on the business being sold. This involves reviewing financial statements, customer contracts, leases, licenses, permits, and other relevant documents. The agreement should specify the timeframe within which the due diligence process should be completed. 5. Assumption of Liabilities: The agreement should explicitly state which liabilities the buyer is assuming, such as outstanding loans, contracts, leases, or pending litigation. The seller may need to provide warranties and representations regarding the absence of undisclosed liabilities. 6. Non-Competition and Confidentiality: Non-competition and confidentiality clauses are common in buy/sell agreements and are essential to protect the interests of both parties. These clauses should specify the duration, geographic scope, and activities prohibited for the seller after the sale. 7. Allocation of Assets: If the sale involves the transfer of assets instead of the entire business, the agreement should clearly list and allocate each asset being sold. This may include inventory, equipment, trademarks, patents, licenses, and any real estate. Different types of New Mexico checklists — buy/sell agreement— - contingencies can be categorized based on the type of business being sold (e.g., retail, manufacturing, service-based) or the nature of the transaction (e.g., asset purchase, stock purchase, merger). Each type may have specific considerations that need to be addressed in the agreement to ensure a successful sale or purchase. Overall, a comprehensive New Mexico checklist — buy/sell agreement— - contingencies will cover all the crucial aspects of the transaction, protecting the interests of both buyers and sellers while ensuring compliance with New Mexico state laws and regulations.
