What Happens with a Stock Purchase Agreement in Florida?

What Happens with a Stock Purchase Agreement in Florida?

What Happens with a Stock Purchase Agreement in Florida?

Growing a business takes time, patience, hard work, and dedication. Ideally, your efforts will pay off, and your business will grow. Once your entity has become a successful enterprise, you may be ready to sell and move on to other endeavors. During the sales process, you may need a stock purchase agreement. So, what happens with a stock purchase agreement in Florida?

What is a Stock Purchase Agreement?

A Stock Purchase Agreement is a document that includes terms regarding how ownership of a company will transfer to a buyer. These legally binding documents typically include the following:

  • The agreement’s specific terms
  • The amount the buyer will pay for the stock
  • The parties and their contact information
  • The number of shares being sold and their method of transfer
  • Each share’s value and other important financial details
  • Buyer and seller representations and warranties regarding the transaction
  • Liability provisions
  • Closing terms
  • Dispute resolution provisions

In addition, stock purchase agreements provide a legal structure that controls and defines how a buyer and seller transfer a company’s stock ownership.

Stock Purchase Agreement Disclosures

Stock purchase agreements usually include disclosures and allow buyers to complete due diligence. Disclosures and due diligence are important as they can help the parties avoid problems that would disrupt the transaction or lead to litigation.

Asset Purchase Agreements

A stock purchase agreement is distinguishable from an asset purchase agreement. An asset purchase agreement is a legal document that defines how a buyer will acquire the selling entity’s assets rather than stock ownership interest.

While stock purchase agreements may sound relatively straightforward, these are complex documents that contain numerous clauses and provisions. The clauses are usually the product of attorney negotiations between each side’s counsel.

One of the most contested provisions in a stock purchase agreement concerns indemnification. The purpose of an indemnification clause is to compensate a party for loss or harm caused by the other’s inaction. For example, a standard indemnification clause would require a seller to indemnify and defend a buyer, their officers, and employees from loss arising from several conditions. These conditions could include a breach of warranty, a negligent act or omission, and other potentially harmful events.

Stock purchase agreements can be a useful way to clearly identify the parties and terms of a transaction. These documents also provide a way for the seller to disclose and the buyer to learn important facts about the company and the transaction. However, it’s important to remember that these legally binding agreements have numerous provisions and implications. An omitted or unclear term can harm the buyer or seller and the overall stock purchase agreement.

The best way to protect yourself during this type of transaction is by working with an experienced Florida small business attorney. Your small business counsel will be familiar with the various laws that apply to this type of agreement. In addition, your counsel can review proposed language and negotiate terms that protect your interest. At the Florida Small Business Center, we draft and review stock purchase agreements and can help you with your transaction. Contact us today to learn more about what we can do to support your small business.

Contact an Experienced Florida Business Lawyer

Attorney Richard Sierra at the Florida Small Business Legal Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.

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