Austin, Texas Right of First Refusal Lawyer
Texas Business Lawyer Handles Shareholder Agreements
John McDuff, Attorney at Law and CPA
Businesses are often started with capital invested by a small group of owners. These owners may want to make an agreement among themselves with respect to certain matters. For example, they may agree to vote for certain owners to be elected to the board of directors, to the exclusion of others. This could occur when some of the investors contribute most of the capital to the business. Or, they may want some control as to who else becomes a shareholder in the company. Or, the owners may want to avoid certain people, such as the owner’s wife or his children from becoming a new owner in the company and owner in the investment group. There may be other reasons to make a shareholder agreement.
All of these types of provisions are oriented around controlling who is going to be an owner. There may be a right of first refusal to purchase any shares that one of the owners may sell. The right would be owned by the group. If a member of the group should want to sell his stock to an outsider, a purchase may be made by the group, instead of the intended purchaser. The key to this type of provision is for the group’s purchase price to be the same as the price offered by the intended purchaser. The only problem is funding the purchase. Sometimes agreements may be put into place on this, such as one-half of the purchase price being paid in cash, and the other half in a note. The paragraph above is an example of the common elements of shareholder agreements. As an Austin business attorney and businessman with 30 years of experience in the practice of business law, I have helped many business owner groups solidify their agreements through customized, binding shareholder agreements. If disagreements erupt at some point, my experience as a shareholder litigation attorney is useful as well.
One typical challenge for shareholders is to come up with the value at which shares will be sold or purchased in the event of death or divorce. Coming up with a method of valuation — a formula or definition — that will adapt to growth and changes in the company over time is part of the process of crafting a workable shareholder agreement.
My first career was as a CPA. I apply my knowledge of accounting methods along with my legal skills to help my clients who are crafting shareholder agreements to customize their own solutions. For example, I advise them that the accounting value of a business often understates the value of a business, and that they may wish to peg share values on earnings rather than on assets.
I am prepared to help my Austin business clients identify issues, address them and carry them out in the area of shareholder agreements and other business transactions.
The quality of my work is well recognized by my clients, and I have received the AV rating* under Martindale-Hubbell’s peer review rating system.
Contact me at 512.457.1177 to schedule an appointment.