Introduction
A Buy-Sell Agreement is a legally binding contract between a business and its owners that clearly lays out how significant events—such as death, divorce, disability, or departure of a partner— will affect the management and control of the business. A well-drafted agreement anticipates the intent and needs of the owners, as well as the potential conflicts that may arise among them if one or more wishes to sell his/her interest in the business or is forced to dispose of such interest, as may happen in a bankruptcy proceeding.
An Effective Buy-Sell Agreement Describes:
- When and under what circumstances may a business dispose of an owner’s interest?
- Whether the other owners or the business have the opportunity to buy the interest from that owner before its disposition to an outside party.
- How much to charge for that interest?
- Who the remaining owners are willing to accept as a substitute owner?
Buy-Sell Agreements also contain valuation clauses to calculate what a shareholder or member’s ownership interest is worth.
Many new business owners overlook one of the most important aspects of starting a new business relationship: agreeing to how significant future changes will affect the management and control of the business. For example, what happens if your partner dies, becomes disabled, or is otherwise incapacitated? What if she files for divorce? Or bankruptcy? A well-designed Buy-Sell Agreement addresses these and other vital questions—before things get ugly.
Your business is at risk if you don’t have a Buy-Sell Agreement in place. Without a clear succession plan, disputes among partners—or their surviving spouses—can lead to loss of valuable time, increased expenses, and costly litigation. However, the good news is that The Private Firm’s attorneys have significant experience drafting Buy-Sell Agreements for business owners.
Putting together an effective Buy-Sell Agreement is not tricky. In this document, The Private Firm addresses common “who, what, when, where, and why” questions in a typical Buy-Sell Agreement. Other names for this agreement include shareholder agreements or succession agreements (depending on your entity type).
CONTACT THE PRIVATE FIRM TODAY TO GET YOUR BUY-SELL AGREEMENT STARTED.