QUESTION
When selling a professional corporation, do the proceeds have to be distributed in proportion to the share ownership? in
Asked on Aug 15th, 2015 on Business Law - California
More details to this question:
The buyout involves an upfront payment and then a commitment to work at a certain rate of reimbursement for 5 years, basically the buyout compensates for discounted future work. Can the buyout amount be distributed according to how much future discounted work the equal share partners are likely to perform based on past work patterns?
2 ANSWERS
Estate Litigation Attorney serving Redlands, CA
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Price Law Firm, APC
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While you could probably provide for this type of buyout, it sounds like a recipe for disaster. Trying to project five years into the future of how much work will be performed based on someone who no longer owns the business, invites litigation.
A cleaner way would be to have a fixed amount for the buyout provision. Then enter into a different contract for five years for future work.
Answered on Aug 29th, 2015 at 2:40 PM
Business Transactions Attorney serving Los Angeles, CA
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Doland & Fraade
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it is probably possible, but this is no do it yoruself project. If you will vary the cutomary California law then you want ot check the bylaws, any shareholder agreements, and the sales agreement. You will also want to involve a CPA immediately to do a tax analysis.
Answered on Aug 16th, 2015 at 10:43 AM