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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 9864
Experience:  30 years of corporate, litigation and international law
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I'm submitting a counteroffer in a settlement negotiation

Customer Question

i'm submitting a counteroffer in a settlement negotiation that's been going on over a year. Negotiations have been very unpleasant and stressful, as the other side refuses to authorize access to financials of certain underlying businesses that are relevant for our valuation (we strongly believe there has been misappropriation). rather than going through the cost to litigate to try to gain access, we are submitting a counteroffer. I would like a professional opinion on this response and any recommended changes...Attorney's name: 
 
We have carefully considered the consulting agreement you proposed as well as the tax implications with our accounting consultant. In an effort to finalize a negotiated settlement that is acceptable to both parties, we will accept one of the following options:1.     Purchase Option:  The terms would substantially replicate the terms that you proposed at the meeting with the principals, with the following compromise to meet you half-way:  an aggregate purchase price of $925K, payable as follows:  $150K at closing, with the balance payable at 6% interest over 39 months.
 
OR ALTERNATIVELY
 
2.     Consulting Agreement Option:  In view of the significant tax inefficiency of the consulting agreement structure (i.e., resulting from the conversion of the settlement proceeds from long-term capital gains under the purchase structure both parties agreed to on 6/20/16 – to ordinary income under this framework), a payment of $200K would need to be paid at the closing, followed by a 39-month service term, with the aggregate compensation amount thereunder (i.e., supplemental to the closing payment) set at $900K, grossed up to reflect 6% interest over 39 months, then divided by 39 to establish the monthly payments.
 
We prefer to reach a negotiated settlement, but we’ll be able to reach such a result only if there is a measure of flexibility by both parties, rather than your unilateral prescription of terms. We have confidence that a mutually acceptable agreement can be signed in the next few days. If not, we’ll plan to proceed with the dissolution proceeding on the 12th which will be highly disruptive to the businesses involved with subpoenas of Dr ABC, Dr. 123, office manager 1, employee 1(who is daughter of partner (for access to accounts and financial), Daughter 2 (for accepting goods and services belonging to LMT), Partner name for failing fiduciary responsibilities, and Partner wife. We prefer to resolve a 20+ year business partnership and personal relationship amicably. 
Thanks.
 
XXX
Submitted: 4 months ago.
Category: Business Law
Customer: replied 4 months ago.
i'm not sure how to adjust price
Expert:  Richard - Bizlaw replied 4 months ago.

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

Am I correct that the two options are designed to get to the same net dollar figure after taking into account the different tax treatment of the two proposals? Are you asking whether the two proposals achieve that goal?

Customer: replied 4 months ago.
i'm most concerned about the second to last sentence that talks about dissolutionment proceedings being disruptive to the businesses.... (he is the one who filed the petition to dissolve). Should i use specific names? etc.... also, if the wording is legally accurate...
Expert:  Richard - Bizlaw replied 4 months ago.

There is nothing wrong with being specific about what the dissolution proceeding will entail. I would premise the offer with the statement that this proposal is part of settlement discussions and cannot be used in any proceeding. CPLR 4547. That way your statement in the offer cannot be later used in court.

If I have answered all your questions, please positively rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus.

Expert:  Richard - Bizlaw replied 4 months ago.

If you have more questions I will answer them in the morning.

Expert:  Richard - Bizlaw replied 3 months ago.

I answered your question about a week ago. If I have answered all your questions, please highly rate my answer as that is how I get credit for working on your question.