Shareholders agreement for a company planning to sell within five years

Owners who intend to sell their company within a few years should have a shareholders' agreement written for the sale: how the decision to sell is taken, how a shareholder who disagrees is carried along, who gives the warranties and who stays for the earn-out, and what has to be tidied up before a buyer's lawyers look at the company. The agreement also has to deal with departures before the sale and whether they share in it. The agreement is drafted for the shareholders jointly, after a briefing session with all of them, with a note on how it fits the articles, for a fixed fee of £995 and delivery in five working days.

Who this is for

Founders and owners in England and Wales who have decided that the plan is to sell, whether to a trade buyer, a private equity fund or a management team, and want the agreement between them built around that outcome.

What matters in a shareholders' agreement built for a sale

The exit as the agreement's purpose

The agreement should state the shareholders' intention to seek a sale within a stated period, the kind of buyer and the minimum value they have in mind, and the preparation they commit to (accounts, contracts, IP, staff, systems), not as binding promises to sell but as the frame within which the reserved matters, the drag threshold and the leaver provisions are set; an agreement that says what the owners are building towards is read differently from one that does not, and a buyer's lawyers will read it.

The decision to sell and the thresholds

The agreement should say how a sale process is started (a resolution of a stated majority, the appointment of advisers, the information given to shareholders), how offers are considered, the threshold for accepting an offer (a majority by shares, perhaps including named founders, with a minimum price below which no shareholder is bound), and how shareholders who want different things (a trade sale now, a fund in two years, no sale) are dealt with by the threshold rather than by argument; a minimum price and a stated period are what make a drag-along acceptable to a shareholder who might be dragged.

Drag-along, tag-along and completing without every signature

Drag-along at the agreed threshold, with the protections a dragged shareholder needs (same price per share for the class, same consideration, no warranties beyond title, a bona fide third-party buyer), tag-along so that no shareholder sells control alone, and the mechanics in the articles (a director as attorney to sign transfers, the price held on trust) binding every shareholder under section 33 of the Companies Act 2006 are what let the sale complete when one shareholder refuses; the agreement should also provide for option holders and for any shareholder loans and guarantees to be dealt with on completion.

Warranties, earn-outs and who stays

A buyer will want warranties about the company from the sellers, often several of them, and an earn-out or a retention tied to the business's performance after completion with the founders staying to deliver it; the agreement should say in advance how warranty liability is shared between the shareholders (in proportion to proceeds, or only by those who ran the business, with a cap), who will give restrictive covenants to the buyer, who is expected to stay and on what terms, and how an earn-out is shared between those who stay and those who leave, because a shareholder who receives the same price as the founders but gives no warranties and stays for nothing is a shareholder the founders will resent on completion day.

Tidying the company so that it can be sold

The agreement should commit the shareholders to the housekeeping a buyer's due diligence will test: IP assigned into the company under section 90 of the Copyright, Designs and Patents Act 1988 from every founder and contractor, customer and supplier contracts in the company's name and signed, employment contracts and the staff handbook in place, the statutory books and Companies House filings current, the cap table and the option scheme documented, data protection compliant, and any related-party arrangements on arm's length terms or unwound; a sale is delayed and discounted by what diligence finds, and the agreement is where the owners commit to finding it first.

Departures before the sale

Vesting and leaver provisions should say what a shareholder who leaves before the sale keeps and at what price, whether a good leaver's shares participate in a sale within a stated period after departure at the sale price, and whether a bad leaver's do not, with the valuation for a leaver bought out before a sale revisited if the sale happens soon after at a higher value; the agreement should also address a shareholder's death or incapacity before the sale, and the note on the articles sets out the transfer and drag provisions the plan needs.

What it costs

Shareholders agreement, £995. An agreement between the shareholders of a private company, with a note on how it interacts with your articles. Five working days.

Buying online forms the engagement on payment. The scope is what the shareholders agreement page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A briefing session with all shareholders together, to work through the questions people avoid asking each other
• A shareholders agreement drafted for your actual situation rather than a precedent with the names changed
• A note on how the agreement interacts with your articles, and whether the articles need amending to make it work
• A plain English explanation of every material choice, so nobody signs something they have not understood
• One round of amendments
• Signature-ready documents

What is not included

• Acting for individual shareholders separately, because I act for you jointly
• Company valuation
• Tax structuring, which needs your accountant and should run alongside this
• Amended articles of association and IP assignments, which I quote separately
• Filing at Companies House
• Resolving a dispute that has already started

Questions I am often asked

Can one shareholder block the sale of the company?

Not if the agreement contains drag-along at a threshold the others can reach and the articles contain the mechanism. The dragged shareholder is protected by the same price, the same terms and a minimum price; they cannot hold out.

Who gives the warranties to the buyer?

What the agreement says in advance: usually the shareholders who ran the business, with liability shared in proportion to proceeds and capped. Deciding it now avoids the argument on completion day.

A founder leaves two years before we sell. Do they share in the sale?

What the leaver provisions say: a good leaver may keep vested shares and share in a sale within a stated period, a bad leaver is bought out at the leaver price. The agreement decides it before anyone leaves.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with drag along and tag along rights
• Shareholders agreement for a lifestyle business that will never sell

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.