Offer To Purchase Partnership Interest
Offer to Purchase Partnership Interest, Small Business
I, __________________, (“Buyer”) a partner, have made an Offer to Purchase another partnership interest owned by _________________ (“Seller”). Buyer offers to buy ____ (Percentage, units, or other suitable measurement) of Seller’s partnership interest (“Partnership Interest”) in the partnership (the “Partnership”) carrying on the business of Partnership from the premises of Partnership under the name Partnership Name, upon the following terms and conditions:
I. The purchase price for the Partnership Interest will be Purchase Price of Partnership Interest, $________, which will be payable by cash or by certified check on the Closing Date (as defined below), or by an installment payout plan as indicated in Exhibit 1. The Buyer will also assume all liabilities of the Partnership on the Closing Date.
2. Time shall be of the essence of this Offer. The closing of this transaction shall take place at ______ p.m. on _______________ (Date) or such earlier or later date as may be mutually acceptable to the parties hereto (the “Closing Date” or “Closing”).
3. This Agreement shall inure to the benefit of and be binding upon the respective heirs, executors, administrators and assigns of each of the parties hereto.
4. After acceptance of this Offer, the business of the Partnership shall be carried on in the normal course.
5. This Offer shall be irrevocable by the Buyer until 5:00 PM on ________ (Date) until which date and time offer will be open for acceptance, after which time and date, if not accepted, this Offer shall be null and void.
6. Notices.
Any notice required by this Agreement or given in connection with it, shall be in writing and shall be given to the appropriate party by personal delivery or a recognized over night delivery service such as FedEx.
If to the Buyer: _____________________________________________________.
If to the Seller: ___________________________________________________.
7. No Waiver.
The waiver or failure of either party to exercise in any respect any right provided in this agreement shall not be deemed a waiver of any other right or remedy to which the party may be entitled.
8. Entirety of Agreement.
The terms and conditions set forth herein constitute the entire agreement between the parties and supersede any communications or previous agreements with respect to the subject matter of this Agreement. There are no written or oral understandings directly or indirectly related to this Agreement that are not set forth herein. No change can be made to this Agreement other than in writing and signed by both parties.
9. Governing Law.
This Agreement shall be construed and enforced according to the laws of the State of ____________________ and any dispute under this Agreement must be brought in this venue and no other.
10. Headings in this Agreement
The headings in this Agreement are for convenience only, confirm no rights or obligations in either party, and do not alter any terms of this Agreement.
11. Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.
In Witness whereof, the parties have executed this Agreement as of the date first written above.
_________________________ _______________________
Buyer, I hereby agree to all terms of this Agreement Seller
___________________
Witness or Notary
___________________
Date
Exhibit 1: Payout Plan, if one is used.
Offer to Purchase Partnership Interest, Small Business
Review ListThis review list is provided to inform you about the document in question and assist you in its preparation. This Agreement is relatively straightforward and is usually used for small business situations such as one partner in a small enterprise buying out the other party. The real questions relate to whether to do it or not, what the terms and conditions are, and not to burden the enterprise unduly after the sale due to the pressure to make added payments plus the loss of the contributions of the other owner or owners.
1. Make multiple copies and give each party one. Using a notary to witness the Agreement is a good idea because the parties are so close to each other and the Agreement needs to stand without any later dispute as to oral conditions, and so on and so on.
2. You should at least consider having a financial planner review your projected cash flows related to how the pay out or pay off will work and whether the business can stand the added financial pressures of new payments coupled with the loss of a partner’s contribution. This concern assumes the payout will be on a schedule. If cash up front, not based on the proceeds taken from the business, then the Agreement has a much better chance of working for the Buyer.
Frequently Asked Questions
What is an offer to purchase partnership interest?
An offer to purchase partnership interest is a formal proposal made by a buyer, who is a partner, to acquire another partner's ownership stake in a partnership. The document outlines the terms and conditions of the proposed purchase, including the purchase price, closing date, and assumption of liabilities. It serves as a starting point for negotiations between the buyer and seller.
Who can make an offer to purchase partnership interest?
According to the article, the buyer making the offer is a partner in the partnership. The offer is directed to another partner who owns the partnership interest being sold. The document identifies both parties by name and their roles as buyer and seller.
What does the offer to purchase partnership interest include?
The offer includes the percentage or units of the seller's partnership interest being purchased, the purchase price, and the payment method, which may be cash, certified check, or an installment plan as indicated in an exhibit. It also specifies the closing date and time, and states that the buyer will assume all liabilities of the partnership on the closing date. Time is stated to be of the essence.
How is the purchase price paid in an offer to purchase partnership interest?
The purchase price is payable by cash or by certified check on the closing date, or by an installment payout plan as indicated in Exhibit 1. The specific amount is stated in the offer. The buyer also assumes all liabilities of the partnership on the closing date.
What is the closing date in an offer to purchase partnership interest?
The closing date is the date and time specified in the offer for the transaction to take place, or such earlier or later date as may be mutually acceptable to the parties. The offer states that time shall be of the essence. The closing occurs at a specified time on the closing date.
What does it mean that time is of the essence in this offer?
When time is of the essence, it means that the deadlines and dates set forth in the offer, such as the closing date, are critical and must be strictly adhered to. Failure to meet these deadlines may constitute a breach of the agreement. This clause emphasizes the importance of timely performance by both parties.
What liabilities does the buyer assume in an offer to purchase partnership interest?
The buyer assumes all liabilities of the partnership on the closing date. This means that from the closing date forward, the buyer is responsible for the partnership's obligations. The offer does not specify any limitations on this assumption.
Is an offer to purchase partnership interest legally binding?
The article states that the agreement shall inure to the benefit of and be binding upon the respective parties. This indicates that once accepted, the offer creates a binding contract. However, the exact legal effect depends on the specific terms and applicable law.
Can the closing date be changed in an offer to purchase partnership interest?
Yes, the closing date may be changed to an earlier or later date if mutually acceptable to the parties. The offer specifies a default closing date and time, but allows for mutual agreement to alter it. This flexibility is subject to the parties' consent.
What happens after the offer to purchase partnership interest is made?
After the offer is made, the seller may accept, reject, or negotiate the terms. If accepted, the transaction proceeds to closing on the specified date, with the buyer paying the purchase price and assuming liabilities. The offer becomes a binding agreement upon acceptance.
