WebCredenza 2024 Exit rights in business agreements

Recording available after original program date, 1/12/2024.

A client investment in an operating business, particularly a minority stake, is only as good as its liquidity rights. If a client cannot readily sell his or her ownership stake at fair market value, it has little real value. The key to ensuring liquidity is contractually creating a private market for the ownership stake. This market can come in the form of requiring other stakeholders, including the majority owner, to buy the minority stake at a mutually agreeable price, or creating other mechanisms for selling the stake to third parties. Without these contract rights, a stakeholder has no liquidity and is stuck. This program will provide you with a practical guide to planning and drafting contractual liquidity rights in closely held companies. 

•    Planning and drafting liquidity rights in closely held companies.
•    Counseling clients about the limitations and risks of liquidity in closely held companies. 
•    Framework of alternatives for determining most appropriate liquidity rights. 
•    “Texas standoff” or “Russian roulette” – opportunities, risks and tradeoffs.
•    Drafting “tag-along” and “drag-along” rights – practical uses and drawbacks.
•    How to think about valuing closely held ownership stakes.

Opinions and positions stated by presenters of MoBarCLE programs are those of the presenters and not necessarily those of The Missouri Bar. This program is intended as information for lawyers in Missouri, in conjunction with other research they deem necessary, in the exercise of their independent judgment.

Note: This material qualifies for self-study credit only. Pursuant to Regulation 15.04.5, a lawyer may receive up to six hours of self-study credit in a reporting year. Self-study programs do not qualify for GAL Certification, ethics, elimination of bias or Kansas credit.