December 2015 – How We Entrepreneurs with Buy-Sell Agreements

If you have two or more owners who are unrelated (except husband & wife) that own approximately equal shares of a business (corporation, limited liability company or limited partnership) or have a family owned business where your kids may someday take over, or perhaps you are a silent investor, one of the biggest mistakes you can make is to ignore the fact that sooner or later the ownership of your business will change hands.

I have seen time and time again the results when business owners don’t’ take the necessary steps to eliminate the surprises, the hassles and the unexpected by preparing in advance the terms and conditions for any changes in ownership.

Sadly, and more often than not, the stories shared with me over the years of how this one issue turned into a major confl...

Simply put, a buy-sell agreement is a binding contract between co-owners that controls when an owner can sell his interest, who can buy an owner’s interest and what price will be paid for that interest. A buy-sell agreement can control all transfers of business ownership to the benefit of both the owner wishing to transfer ownership and the other owner (or owners) wanting to acquire ownership. This agreement can assure a selling owner (or his/her estate) of a purchase for fair value and upon terms and conditions that are acceptable to all parties.

So what does a buy-sell agreement accomplish?

• It controls who can own an interest in the company by preventing an outsider from purchasing an interest.
• It provides a guaranteed buyer for your ownership interest because...