Innovative Employee Buyout: Structuring Complex Asset Acquisition and Business Formation
Challenge
A group of senior employees from a well-established private manufacturing and distribution company approached us to assist in purchasing the company's assets from its founder. The transaction required a creative financing solution, formation of a new entity, and navigation of various regulatory hurdles.
Approach
Our multidisciplinary team of corporate transactions, tax, and labor & employment attorneys:
- Structured an innovative earn-out mechanism to bridge the valuation gap between the parties
- Drafted and negotiated a complex asset purchase agreement, addressing representations, warranties, and indemnifications
- Formed a new limited liability company (LLC) with tailored operating agreements for the employee group, including provisions for future equity incentives
- Provided comprehensive tax advice, optimizing the transaction structure for both the seller and buyers
Result
We successfully completed the asset purchase within 3 months, achieving remarkable outcomes:
- Implemented an earn-out structure that satisfied both the founder and new owners, with payments tied to EBITDA targets over a 5-year period
- Retained 95% of the company's workforce through the transition, maintaining operational continuity
Disclaimer
The information provided in these client success stories is for illustrative purposes only and does not constitute legal advice. Each client's situation is unique, and outcomes may vary based on specific circumstances. Sequoia Legal does not guarantee similar results in other matters. The content of this document is protected by copyright and other intellectual property rights owned by Sequoia Legal. Any unauthorized use, reproduction, or distribution of this material is strictly prohibited.
