Why you need this Buy-Sell agreement
What happens to your business if something happens to you or one of your partners?
What if you become disabled or a partner becomes disabled? What about at retirement or if an unresolvable disagreement comes along? Implementing a Buy-Sell Agreement for your business today can help you know the answers to these questions and more in the future. Properly structured and funded, a Buy-Sell Agreement can protect the wealth of business owners and their families.
A Buy-Sell Agreement is like a blueprint for the future of your business. It is a binding document that obligates one party to sell and another to buy some or all of a business interest upon the occurrence of some designated event in the future, typically death, disability and/or retirement.
The purposes of a Buy-Sell Agreement can be to:
* Provide liquidity and a buyer for a departing owners share of the business
* Avoid conflicts and power struggles among partners/owners
* Prevent unwanted persons or family members from becoming shareholders
* Fix the value of the business entity for estate purposes.
Determining the value of your business:
Determining the value of your business today and at the time of a triggering event is an important part of implementing your Buy-Sell Agreement.
Funding a Buy-Sell Agreement through insurance:
Generally when a Buy-Sell Agreement is executed one party will be transferring cash in exchange for all or a portion of the business. Typically an insurance policy is purchased to provide funding for when these triggers take place as a result of death or disability of an owner.