Owners of closely held businesses often enter into buy-sell agreements with a number of goals in mind. Among these goals are to ensure that the business remains in the hands of the current owners and/or that a ready market of prospective buyers exists for a departing owner’s interest in the event of certain triggering events, such as an owner’s death, disability, or retirement.
Although buy-sell agreements are quite common in businesses with more than one owner, the attorneys of the Forrest Firm offer targeted counsel that will enable you to avoid common mistakes that business owners often make when engaging in buy-sell planning. Challenges often occur for business owners due to concepts like fixed valuation of the business, failure to properly fund the plan, and improper terms in the agreement.
There are many ways to structure buy-sell agreements, whether you’re offering rights of first refusal to surviving partners, triggering a mandatory sale of the business upon death of a partner, or handing down business interest from a partner to his or her surviving family members. While each of these scenarios can work fairly for a business and its owners (and their families), they must be applied in the correct circumstances to affect all in a balanced way. As with valuations, many business owners implement buy-sell agreements with provisions that may work at the founding of the business, but later on these same provisions can be problematic. The Forrest Firm works with business owners to match the terms of their buy-sell agreements to the realities they currently face with their businesses and families.B