Buy/Sell Agreements are a must for your organization, regardless of whether you are a sole owner or a partnership firm with one or more persons. The agreement will help protect the sale of your business interests in the future or if you want to purchase the interest of the co-owner/s.
Why Buy-Sell Agreement Is Crucial For Any Business
A buy-Sell agreement will clear the picture if a situation develops in the future where you or your partner wants to sell their holding in the company. The agreement will clarify who can buy that interest and at what rate. The Buy-Sell Agreement will also outline what happens to the owner’s interest should they retire, or are unable to work because of a health reason, or should they pass away.
The Law Office of Rowena N. Nelson has been drafting buy-sell agreements for various businesses for a long time now. We understand the legal implications for businesses of not having a buy-sell arrangement and help business owners create agreements that can fully protect their business interests for now and in the future.
Factors to Consider While Drafting Buy-Sell Agreement:
- The type and size of business
- The value of a business, including underlying assets
- Equity holding of each owner
- Ages and health status of equity owners
- Insurance status of owners
- Legal issues the company is facing, if any
- Chances of the current owners remaining active
- The manner of participation of the next generation in the business
- Status of licensing and other requirements
The legal experts at The Law Office of Rowena N. Nelson will explain why life insurance and disability insurance have important roles in buy-sell agreements. After the value of your business is determined, the next step is funding the transaction. Insurance ensures that money is readily available when needed.
If any of the owners die, that person’s insurance policy can be used to finance the buyout. This will keep your business in good financial shape, and even other heirs can be paid an appropriate sum based on the terms of the agreement.