Buy / Sell Planning
A buy / sell agreement is a legally-binding agreement between co-owners of a business concerning what will happen when one co-owner leaves, whether they die or they choose to leave the business.
Here are some important questions that you need to consider before setting up an agreement:
- Are you already planning to leave your business at some point in the future?
- Do you or the co-owner of your business have any pre-existing health conditions?
- What will happen to your family members if you die unexpectedly?
- What will happen to your business if something happens to you?
You and your business partner should not set up a buy / sell agreement by yourselves. There are different types of agreements that may benefit you and your partner.
Your agreement may include causes such as:
- What can trigger a buyout?
A buyout may be triggered by death, retirement or disability. There are many reasons that a co-owner may choose to leave a company. You need to put down, in writing, what reasons will be honored in your agreement. This will help you and your partner transition into your next business stage.
- Will you be allowed to buy back your share if you choose to leave?
If you own a business, you have already put a certain amount of wealth into it. You will also put funds into a buy / sell agreement. Make sure to discuss if you can reclaim some of that money.
- Who will buy your share in the business if you leave? If a co-owner dies, how will their family be cared for? What will happen to your business after you leave?
These are things that you need to talk to your business partner about. You can make your wishes known in a buy-sell agreement.
The professionals at SOGO Wealth & Risk Management want to make sure that you and your business partner put together the perfect buy / sell agreement.