How to Write a Buyout Letter
When you seek to purchase a corporation without the approval of the company itself, you are basically buying a controlling share of the company's stock directly from the shareholders. To do this, you will write a buyout letter, otherwise known as a "tender offer," and present it to the shareholders of the company you wish to obtain. You must follow several corporate securities formalities when composing a buyout letter to avoid federal prosecution.
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Instructions
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Prepare for the Buyout Attempt
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1
Research the current price of the corporation's stock. Don't just look at the price it is currently trading at, but also look at past trends and future projections by industry experts to get an idea of how much you will offer for each share during the buyout.
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2
Decide on a price you will offer for each share of stock. Remember that shareholders in publicly traded corporations can always sell their shares on the market, so you will need to offer them more than the current market price in order to induce them to sell to you.
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Compose the Offer Letter
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3
Write your reasons for the attempted buyout, and explain what you plan to do with the company once you obtain a majority share, in the letter. Many times, shareholders are attached to the companies they hold stock in and are unwilling to sell their shares, even at a premium, to people they think will dismantle the corporation.
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4
State the exact price you are offering for each share. Federal securities regulations require that you offer the same price to all shareholders when the corporation is publicly traded on a stock market.
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5
Write how many shares you need to acquire to gain control. Federal law may require that you actually purchase this number of shares if you purchase any shares.
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6
Include the range of time that your offer will remain open. You must keep your offer open during this time, even if you receive too many replies to sell. If this is the case, you may be required to purchase a prorated number of shares from each seller who agreed to sell during your offer.
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Tips & Warnings
Buyout offers are most effective when used with publicly traded corporations. This is because establishing a fair market price for the stock of non-traded corporate shares can be difficult and risky.
Understand that if your buyout letter fails to bring in the required number of shares to gain control of the company, you will be prevented by law from buying any of the shares offered to you.
