A Minority Shareholder Tracks Closing Conditions in a Sudbury Sale

The situation

Tarek held a minority stake in a Sudbury company, acquired years earlier while he was a college student doing part-time work for the founders, Wei and Ying, in exchange for a small equity grant instead of a higher wage. He had stayed on the shareholder register even as his own path moved elsewhere, checking in occasionally but leaving the running of the company entirely to Wei and Ying as majority owners. When a national buyer made an offer to acquire the whole company, in a transaction valued at roughly $5 million, Wei and Ying negotiated the letter of intent directly with the buyer and then brought the minority holders, including Tarek, into the process once the broad terms were set.

A letter of intent, or LOI, is a document that sets out a buyer and seller's shared understanding of a deal's key terms — price, structure, exclusivity — before the lawyers draft the binding contract. It is usually not fully enforceable on price and structure, but it frames everything that follows. By the time Tarek came to us, the LOI had already been signed, and the buyer's lawyers were drafting the share purchase agreement — the binding contract that would actually transfer ownership. Tarek's stake meant his proceeds, roughly in the range of $150,000 to $300,000 depending on final adjustments, were a meaningful sum to him even though he held only a small percentage of the company overall. His main worry was straightforward: he had no visibility into the operating side of the business and no way to independently judge whether the deal, once signed, would actually close and pay out, or stall on some condition he wouldn't even know to look for.

The legal problem

A signed share purchase agreement is not the same thing as money in a seller's account. Between signing and closing, most agreements of this size include a list of conditions precedent — specific requirements that must be satisfied before the transaction can complete. Some are the buyer's to satisfy, such as arranging financing or completing regulatory filings. Some are the seller's, such as obtaining consents from key contracts that change hands on a sale, clearing up any liens registered against company assets, or delivering audited financial statements confirming the numbers the deal was priced on. Until every condition on the list is either satisfied or formally waived by the party it protects, either side can, in principle, walk away without penalty.

For Wei and Ying, running the company day to day, tracking these conditions is part of managing the sale. For a minority shareholder like Tarek, with no operational role and no seat at the table where the buyer's due diligence findings were being discussed, the risk was different: he could find out the deal had collapsed, or been delayed by months, only after the fact, with no chance to ask questions while there was still time to act. Worse, a poorly drafted set of conditions can quietly shift risk onto minority holders — for instance, if a condition allows the buyer to reduce the purchase price for issues found after signing, every shareholder's payout shrinks proportionally, whether or not that shareholder had any role in causing the issue.

Reading through the drafted share purchase agreement, we found one condition that needed particular attention. The agreement made closing conditional on the company obtaining a formal consent to assignment from a key equipment supplier whose multi-year contract accounted for a meaningful share of the company's revenue. Contracts of that kind commonly include a clause requiring the counterparty's consent before the contract can transfer to a new owner on a change of control. If that consent wasn't obtained, or was refused, the buyer would have the right under the agreement to walk away from the deal entirely — not just to renegotiate price, but to terminate. Because the supplier relationship was not something Tarek could see into or influence, this condition represented the single biggest risk to whether his proceeds would ever materialize, and it was buried in a schedule most shareholders would never think to ask about.

What we did

1. Reviewed the full share purchase agreement on Tarek's behalf. Rather than relying on a summary from the majority shareholders' counsel, we read the definitive agreement itself, focusing on the representations and warranties Tarek would personally be making as a selling shareholder, the conditions precedent, and how the purchase price could be adjusted between signing and closing.
2. Built a closing checklist tracking every condition precedent, who was responsible for it, and its status. This turned a dense legal schedule into a plain list Tarek could actually follow — what needed to happen, by when, and whether it had happened yet — updated as the deal progressed toward closing.
3. Flagged the supplier consent as the highest-risk item and asked for regular updates on it specifically. We requested that the majority shareholders' counsel confirm the status of the supplier consent at set points before closing, rather than waiting for a single all-or-nothing update near the end.
4. Negotiated Tarek's individual representations to limit his personal exposure. Some representations in a share purchase agreement are made jointly by all sellers about the company; others are made individually by each shareholder about their own shares. We made sure Tarek was only representing what he could actually know and control — that he owned his shares free and clear, for example — and not standing behind operational statements about a business he had no role in running.
5. Reviewed the escrow and holdback terms. Like most sales of this size, the agreement held back a portion of every shareholder's proceeds for a period after closing, to cover any claims that surfaced later. We confirmed how the holdback would be calculated on Tarek's specific stake and when it would be released, so he understood exactly when his final payment would land.
6. Coordinated with Tarek on the closing itself. Once the supplier consent came in and the last conditions on the checklist cleared, we confirmed the closing documents, reviewed the final funds flow showing exactly how Tarek's proceeds would be calculated and paid, and made sure his portion was directed correctly on closing day.

The outcome

The supplier ultimately provided its consent to assignment, though it took several weeks longer than the original closing timeline anticipated, pushing the closing date back but not derailing it. Every other condition on the checklist cleared without incident. The transaction closed at the roughly $5 million valuation agreed in the letter of intent, and Tarek's proceeds — after the standard closing adjustments and the portion held back in escrow for the post-closing claim period — landed in the range originally estimated when the deal was first signed.

What made the difference for Tarek wasn't dramatic intervention; the deal itself was sound and the majority shareholders were dealing in good faith throughout. It was having an independent, plain-language view of a legal document he had no practical way to assess on his own, and a running tally of what still had to happen before his money was actually his. When the supplier consent took longer than expected, Tarek already knew that was the specific item on the checklist causing the delay, rather than being left to wonder whether the whole sale was in trouble.

The escrow holdback released on schedule several months after closing, with no claims made against it, closing out the file entirely.

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