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Ask Legalease Your Own Question
Legalease
Legalease, Attorney
Category: Business Law
Satisfied Customers: 16288
Experience:  14 years experience corps, LLC's and partnerships; preparation, negotiation of complex contracts and business agreements
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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 stronglybelieve 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
Expert:  Legalease replied 4 months ago.

Hello there --

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Either of these proposed settlements / settlement language is perfectly acceptable legally. In a settlement situation between two businesses the law assumes that all parties negotiating the agreement are of the same intelligence and business acumen and so it is an actual meeting of like minded, equally intelligent people who are negotiating the settlement and who will agree to it and sign it. Because it is a business contract. the courts will uphold the agreement according to the terms in the written document and it will be extremely difficult for either side to get a court to change the agreement. So, anything that the two parties agree to here as a settlement will be upheld later in court.

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MARY