Business Buy Sell Agreement – What’s The Importance?
Starting and running a small business is not for the faint of heart. At every stage, from the first day at the drawing board to the day the doors open to the annual review of profit and loss statements, business owners give their businesses a lot of tender, loving care or TLC. But what if the owner is unable to continue providing that TLC due to incapacity or death? Hopefully, the owner has put together a good business succession plan. If not, it’s time to discuss preparing a buy-sell agreement to preserve your company’s future.
Buy-sell agreements set up a procedure where a company or interests in a company can be sold or divided. This document takes effect when an owner becomes disabled or incapacitated, retires, or dies. Sometimes owners of a company might buy insurance policies to fund a buy-sell arrangement. Legal documents, including estate plans, also provide for business succession.
Reasons To Prepare A Buy Sell Agreement
Buy-sell agreements are critical to the future of your company. If you are no longer willing or able to continue running your company, a buy-sell offers some of the following benefits:
- Choosing your own partners since another partner’s business interest cannot be passed to a third party without approval.
- Protecting company assets against divorce of one or more owner.
- Prevents an owner’s disinterested heirs from either trying to run the company or selling their interest.
- Obtaining a partner’s interest in the company in the event your partner dies, retires, or becomes incapacitated.
- Laying out procedures for calculating the value of the business.
- Possibly includes a way to reduce estate tax.
- Reducing your worries since you don’t have to wonder what partner is going to do with his interest in the business.
- Negotiating buy-sell agreements when the company is started since everyone’s usually getting along at that point.
- Having a buy-sell agreement in place can protect your family’s interest in the business.
This One Document May Protect You Your Company & Your Family
The attorneys at Keystone Law Firm have the know-how to analyze your current situation and help you make thoughtful decisions about your business. Call us at (480) 418-8448 to set up an appointment. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.