A buy-sell agreement is one of the most important and powerful tools you can use to control the destiny of your business. Every small business or family owned business needs a buy-sell agreement for proper Business Succession Planning.
The agreement controls what happens to your company upon your death or disability. It can specify who buys your business and many other matters, including who controls your business in the event of your disability.
A powerful tool to control the destiny of your company upon your death or disability is a buy-sell agreement. This agreement is one in which each owner agrees to offer his or her interest in the business either to the company or to the other owners of the business upon the occurrence of certain events.
Let’s suppose, for example, that you own fifty percent of your company with two other shareholders owning twenty-five percent each. A buy-sell agreement may provide, that when one of the shareholders dies, the corporation will buy back that individual’s shares (known as a redemption plan) or that one or more of the remaining shareholders will buy the stock from the deceased shareholder’s estate (known as a cross-purchase plan).
A well-written buy-sell agreement can help solve several estate planning problems for business owners. It can also help protect and preserve the business from internal disputes among family members or unrelated business owners on the death or disability of an owner.
Buy-sell agreements are a complex business succession strategy that you should not try to implement on your own.
Call us at 254-233-7300 to schedule a consultation to talk about your situation.