If you are a business owner planning to sell your company, one of the most important documents to have is the stock purchase agreement. This document outlines the terms and conditions of the sale and ensures that both buyer and seller are protected throughout the transaction.
One valuable resource for creating a stock purchase agreement is the American Bar Association (ABA). The ABA offers a “Model Stock Purchase Agreement” that provides a framework for drafting a comprehensive agreement.
The ABA`s model agreement covers key provisions such as the purchase price, representations and warranties, conditions precedent to closing, and post-closing covenants and indemnification. The agreement also includes important exhibits, including a disclosure schedule, the form of stock certificate, and a closing checklist.
Using the ABA`s model agreement as a starting point can save time and ensure that the agreement includes all necessary provisions. However, it is important to note that every transaction is unique and may require modifications to the agreement to reflect the specific terms of the deal.
In addition to the model agreement, the ABA offers guidance on drafting and negotiating a stock purchase agreement, including common pitfalls to avoid. For example, the ABA recommends including a provision requiring the buyer to hold the seller harmless from any claims arising from pre-closing operations of the business.
Overall, the ABA`s model stock purchase agreement is a valuable tool for business owners and their advisors in creating a comprehensive and legally sound agreement when selling a company. It is important to work with a qualified attorney to ensure that the agreement reflects the specific terms and requirements of the transaction.