Selling a Business With Co-Shareholders

1. The Second Negotiation

If you own the business with a co-founder, a family trust and a former colleague who came in at 10% in 2014, you have a second negotiation running alongside the one with the buyer: the one between yourselves. It is routinely left until the week before signature, when everyone is tired.

That timing is the mistake. Everything on this page — how liability is shared, who can block the deal, how deferred money is split, who speaks for the group — is easy to agree while the sellers are still on the same side of the table, and painful to agree once the buyer’s draft sale agreement is on the table and each seller starts reading it with their own interests in mind.

The sections below take the co-seller questions in the order of the money at stake: liability first, then power, then the split, then the mechanics of trusts and spouses, and finally the short document that keeps former partners out of court.

2. Who Pays if the Buyer Has a Claim

Start here: it is the question with the biggest number attached. If the buyer makes a warranty claim two years after closing, can they come after each of you only for your own share, or can they pick the wealthiest, most reachable seller, take the whole amount from that one person, and leave them to chase the others?

Those are genuinely different worlds:

3. Your Shareholders’ Agreement Is Now a Deal Document

The agreement you signed with your co-owners years ago, and have not read since, matters the moment a buyer appears. (If you are still deciding what should be in one, see our shareholders’ agreement guide.)

Look for three things:

Whether those provisions exist changes who has power in the room, and a buyer will want to see them early, because a buyer wants 100% and needs to know how to get it. If your agreement is silent, every shareholder has a veto over their own shares — worth knowing before you promise a buyer the whole company.

4. Splitting the Money — and Splitting It Again Years Later

Dividing the price is usually easy, because shareholdings are known. What gets missed is that a sale is not one payment but a series, and the later ones create the arguments.

Then the asymmetries. If one of you gave the bank a personal suretyship and another did not, that should be reflected. If the tax warranties really sit within one person’s knowledge, sharing that risk by percentage may be the wrong answer.

None of it is complicated. It just has to be decided while everyone is still on the same side of the table.

5. One Voice: the Sellers’ Representative

A buyer will not negotiate with five people. If forced to, they will take the softest answer from each of you and assemble it into a position none of you agreed to.

So appoint one of you to speak for all the sellers, with genuine authority:

Write the appointment down, with clear limits on what still needs everyone’s sign-off — a price reduction, a new obligation, an extension of the long stop date.

6. Trusts, and Spouses

Two traps, easy to fix early and painful to fix late.

7. The Agreement You Have With Each Other

Here is the point co-sellers most often miss. The sale agreement governs your relationship with the buyer. It says nothing useful about your relationship with each other. If the buyer recovers R3 million from you and your co-sellers owe you a share, the sale agreement does not help you collect it.

So put your arrangement with each other in a separate document, signed at the same time as the sale. It should cover:

8. How MJ Kotze Inc Helps

The co-seller questions are cheap to answer early and expensive to answer late. In a multi-seller sale we review the shareholders’ agreement before the buyer does, negotiate the liability basis in the warranty schedule, paper the sellers’ representative appointment, confirm trustee resolutions and spousal consents, and draft the inter-seller agreement so it signs alongside the sale agreement rather than after the first claim.