I expect that it would not matter what the shareholder agreement says with respect to distribution of sale proceeds.
The test, based on the wording of the legislation, is percentage of shares (and div rights etc) held prior to the sale.
Contract law has very little to do with the price of fish.
Ideally, you'll have a solicitor with *deal* experience, someone who can put together a Purchase Sale Agreement that protects *your* interests, someone who knows where the potholes are in the buying/selling of businesses and who can steer you clear of them, someone who understands deal structures / buy-outs / warranties and indemnities in M&A transactions ...and understands them inside-out.
You may know more about contract law than the local nice solicitor down the road who does divorces and conveyancing - I do, too - but the chances are you'll get burned on a business purchase / sale transaction if your counterparty is being properly represented by a shrewd professional.
Interesting article, Norman, but I almost choked on my cornflakes when I came to the comment about accountants writing their own contracts vs using one of your drafts. Neither is a great option, I'm afraid. There is no good alternative to getting appropriate legal advice and having the right legal expertise behind the drafting of the contract.
PS: The Appraisal Foundation & the International Valuation Standards Council recently put together a guide on how valuers can make their valuations compliant with International Valuation Standards. I believe it's available for free from their website.
That's a good shot at explaining the new ER rules, Martin. But as you say, there's nothing simple about ER. They took an already complex system and made it even more complex ... as only politicians can do!
John, interesting topic. You ask how the accounting value of a company can be so different from the market value.
May I suggest that only a small component of the difference in price can be explained by the lack of advances in accounting to cater for the rise in both the variety and importance of intangible assets on companies' balance sheets.
Much of the disparity, as with the MS acquisition of LinkedIn, is down to synergies the acquirer sees in the target. MS figures it can make a lot more money with LinkedIn and the LinkedIn data than LinkedIn is making.
So, yes, it's the data. But it's about Microsoft's unique position and dominance of certain markets that will allow them to leverage that data to generate profits that others wouldn't be able to do.
When Apple acquired FoundationDB (for their IP) and promptly killed it .. again, the value Apple saw was Apple specific. The IP was a database technology far cheaper than Oracle's. Apple didn't want that technology available in the market for their competitors to use. So they bought the company and shut it down. The price Apple paid was based on their quantification of the damage they'd see for price pressures in the market if competitors got their hands on the cheaper database. Nobody else would have seen the value in this IP that Apple did.
The data itself has value, yes, but the value of intangible assets is in the eye of the beholder. No accounting standards will ever be able to "accurately" value these assets.
Where possible I try to avoid yearly fees in the first place. While the subscription model works great for the service providers (and, usually, for the customer as well, I concede), I'd don't like being in a position where I could be held to ransom later. I despair of the rush with which people are signing up to subscription services despite there being one-time payment competitors around.
Standarisation of MA would certainly help in M&A. In case of business transfers it would save vendors much time / effort answering due diligence questions and providing information to acquirers.
I like your "if it isn't broke" advice.
It's an interesting an useful article. I wonder how many of these cloud accounting services allow you to port your data. YOUR data. If you're not happy with them later - say fees go up or quality of service goes down - how easy is it to port your data, to simply pack it up and take it elsewhere?