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Under UK law, section 979 of the Companies Act 2006 is the relevant "squeeze out" provision. It gives a takeover bidder who has already acquired 90% of a company's shares the right to compulsorily buy out the remaining shareholders. Conversely section 983 (the "sell out" provision) allows minority shareholders to insist their stakes are bought out.
The freeze may be effected by issuing a letter to the asset holder or guardian in question, informing them of the true origin or beneficial ownership of the targeted funds or assets, and advising them of their potential accessory civil and possible criminal liability in the event of any transfer or disposal of the assets in question.
Buyout clauses are usually set at a higher amount than the player's expected market value. However, on occasion, a player at a smaller club will sign a contract but insist on a low buyout fee to attract bigger clubs if their performances generate interest, which de facto functions as a reservation price set for the selling club.
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An insured buy–sell agreement (triggered buyout is funded with life insurance on the participating owners' lives) is often recommended by business-succession specialists and financial planners to ensure that the buy–sell arrangement is well-funded and to guarantee that there will be money when the buy–sell event is triggered.
The "highly confident letter" was a financing tool created by investment bankers at Drexel Burnham Lambert, dominated by Michael Milken, in the 1980s.Its objective was to enable corporate raiders to launch leveraged buyout (LBO) offers without the debt component of their financing package fully in place.
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In finance, a buyout is an investment transaction by which the ownership equity, or a controlling interest of a company, or a majority share of the capital stock of the company is acquired. The acquirer thereby "buys out" the present equity holders of the target company.