A concern for many businesses with multiple owners is what happens if one can no longer continue working. The remaining owners want to ensure that the departing owner’s family does not interfere with operations or long-term planning. They also want to avoid straining the business’s cash flow with a large buyout. Meanwhile, the departing owner generally wants fair compensation for their share.
If you own less than 100% of a business and want to sell, finding a willing buyer may not be possible. This often leads to litigation and always harms profitability. In any event, all parties have something to lose.
A Buy-Sell Agreement identifies events that may trigger a buyout. Common events include death, disability, divorce, bankruptcy, retirement, or simply a desire to exit. Each situation must be addressed differently.
A good Buy-Sell provides guidelines for handling each event, including pricing methods, timing, and payment terms. Most include arbitration clauses to minimize dispute costs, non-competition clauses for departing owners, and sometimes a mechanism to terminate the Agreement.
A Buy-Sell should also address unique issues when owners differ significantly in age. Younger owners are less likely to die but more likely to divorce or move on, while older owners near retirement or want to reduce work hours. A well-drafted Agreement accounts for these differences practically.
A carefully planned Buy-Sell Agreement ensures that an owner’s interest is protected despite unforeseen circumstances, often without excessive strain on the business’s cash flow, helping the business and its owners continue to thrive.
You need experienced legal counsel to draft a Buy-Sell Agreement and advise each owner about their interests. You can be confident any Agreement we draft is based on experience and careful attention to your specific situation.
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Our business law practice focuses on the legal and tax issues involved in forming, operating, and selling businesses. Whether setting up a Corporation or LLC, or needing an operating agreement, employment
Our business law practice focuses on the legal and tax issues involved in forming, operating, and selling businesses. Whether setting up a Corporation or LLC, or needing an operating agreement, employment
Our Advice Is Backed By 25 Years Of Experience.
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