If you own a business, you have hopefully established a buy-sell agreement in case you or a co-owner voluntarily or involuntarily leaves the company. The creation of the document is just one step in a larger process. You simply can’t draft the agreement and lock it away for safekeeping. The document should be a fluid one, you need to review and perhaps revise the document periodically.
The primary purpose of a buy-sell agreement is to legally confer on the owners of a business or the business itself the right or obligation to buy a departing owner’s interest. But a well-crafted agreement can also help ensure that control of your business is restricted to specified individuals, such as current owners, select family members or upper-level managers.
Another purpose of a buy-sell agreement is to establish a price for the ownership interests. You should engage a qualified appraiser to estimate the value of those interests when first making a buy-sell agreement, and periodically thereafter to ensure the price keeps up with the growing (or shrinking) value of your company.… Continue readingRead More »