There is no doubt that the shareholders’ agreement is essential for a company, especially when there are concerns about corporate governance, succession and even interest in the future sale of shares.
Especially in relation to the sale of equity interests, we highlight 2 points of attention that demonstrate the need for the document to exist, with the goal of positively influencing the company’s final selling price:
1. Valuations’ Improvement: When the partners of a company begin a process of partial or total sale of the company, it is essential that its corporate structure is organized, thus avoiding any friction with future buyers, affecting the final sale price. This is because the agreement is capable of providing clear rules on (i) administrative and financial management; (ii) form and limits of action of partners in the business; (iii) rules and authority for administration; (iv) distribution of profits; (v) succession policy; (vi) non-compete; and (vii) non-confidentiality, bringing greater security to future buyers, especially in cases of partial acquisition.
2. No Conflict for Sale: Another point of extreme sensitivity deals with the possibility/obligation to sell the stake, mainly to minority shareholders and also when there is a dispersed shareholding. In these cases, the need for drag along (obligation to sell) and tag along (guarantee of sale under the same conditions) clauses are essential, as they avoid discussions that bring delay and insecurity, which can often end up making a deal unviable. With clear rules on how and when the sale of shares should take place, disputes between partners are eliminated and the sale process becomes much safer.
The company may even have more than one Agreement. It is possible, for example, to establish an Agreement for minority partners, and others for the majority. Or, alternatively, an agreement for each family nucleus, when we talk about family businesses.
As it deals with confidential issues that are of interest only to the partners, there is no need to register with the Commercial Registry for the parties to demand compliance with the obligations established in the Agreement, unlike what happens with the Articles of Association. The Agreement is, therefore, a safe and confidential instrument in which partners can dispose of their interests in an unrestricted manner, bringing more security and certainty for partners, and transparency for potential buyers.
