If you’re a business co-owner, then you know that there are always risks associated with running your business. Your partner may leave the business, become incapacitated or die. This can leave you in a difficult position if you’re not prepared. When these things happen, it’s important to have a buy-sell agreement in place so that the business can continue operating without any interruptions.
What is a buy-sell agreement?
A buy-sell agreement is a business law contract between business co-owners that dictates what will happen if one of the owners retires or simply leaves the business, becomes incapacitated or dies. The agreement typically includes provisions for how to re-allocate the business ownership interests, buy out the departing owner’s share of the business and/or provide financial security for the remaining owners.
Why do you need a buy-sell agreement?
A buy-sell agreement can protect your business in a number of ways. For example, if one of the business owners dies, the agreement can ensure that the business will continue to operate without any disruptions. If one of the owners retires or leaves the business, the agreement can help to ensure that the business is not sold to a third party.
The agreement can also provide financial security for the remaining business owners if one of them dies or becomes incapacitated. Generally, it’s also important to have a buy-sell agreement in place to help prevent business conflicts and ensure that the business continues operating smoothly.
If you’re interested in creating a buy-sell agreement for your business, there are a few things you’ll need to do. First, you’ll need to draft the agreement. This can be done with the help of a professional, such as a business consultant or attorney. Once the agreement is ready, you’ll need to make sure that it’s legally binding. Finally, you’ll need to have all of the business owners sign the agreement.
