Family Office Sale of Direct Investment

02.2019

Bailey Glasser was engaged by one of our private family office clients to assist them in the divestiture of their partial ownership of a non-core asset. Upon investigation we determined that, in fact, the asset, an industrial manufacturing concern with company owned real estate, was actually a liability due to environmental contamination concerns.

After engaging local environmental counsel to better understand possible state and local theories of liability, we developed a plan to sell our client’s interest in the company in a manner that would reduce future exposure to environmental liabilities. Further complicating matters, our client’s ownership interest was subject to a right of first refusal in favor certain co-owners. The manner in which the right of first refusal was structured made it nearly impossible to sell the client’s ownership position for full value.

Working closely with our client, we developed a strategy to induce one of the co-owners to make an offer for our client’s stake in the company. That offer became the floor for negotiations with co-owners for our client’s majority ownership position. Early in the process we indicated that our client would sell only if provided with a robust and meaningful environmental indemnity supported by appropriate assets.

As negotiations ensued we were able to maintain our position seeking full value for the ownership coupled with the indemnity. By knowing ahead of time which potential future claims required the robust and meaningful environmental indemnity and which ones did not, we were able to arrive at an agreement with a purchaser that met all of our client’s goals.

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