Buy / Sell Agreement

Having a well-drafted buy / sell agreement is essential when creating an exit strategy. This agreement lays down the rules and regulations for what will happen when you or your partner leave the business. Without a buy / sell agreement, you can look forward to a lengthy, complicated exit.

Here is what a typical buy / sell agreement will explain:

  • How to handle exit taxes and ownership interests
  • When a buyout is appropriate
  • Who can acquire your share of the business
  • How to handle exit taxes and ownership interests
  • How to protect trade secrets and competition rights

We strongly suggest that you consider seeking professional assistant to draft a buy/sell agreement between you and your partner. Here are a few things you need to think about while creating an agreement:

  • Do you plan to sell your business?
    You should plan ahead if you know you are planning on selling your business. Will you and your partner leave? Are you trying to reach a specific goal before letting your partner take over? These are important things to think about before starting your business.
  • When are you planning on retiring?
    You might already know a specific age that you want to retire. If you do not, can you come up with a ballpark figure? If you tell your advisor this goal beforehand, you can set up a buy / sell agreement that honors your goal.
  • Do you want to leave your business to a family member?
    You can turn over the reins of a business you own to a family member when you retire. It becomes harder when you have to consider your business partner. Let your advisor know if you want a family member to take over your share of the business if you retire or pass away.
  • What can trigger a buyout?
    Your advisor will probably suggest that you come up with a specific agreement concerning buyouts. You and your partner will save a lot of time if you decide what conditions warrant a buyout ahead of time.
  • Will you or your partner be able to buy back your share?
    What will happen to your share if you are retiring and do not plan on leaving your share of the business to anyone? A buy / sell agreement can guarantee that you leave with your share of the business.
  • What will happen to your business after you leave?
    Your buy / sell agreement can include a clause that prohibits a competitor from taking over your shares. You will also be asked not to work for a competitor or give away any trade secrets. This is a way to ensure that your business will continue in your absence without any interference.
  • If you or your partner dies, how will your family be cared for?
    Let your advisor know if your family will still be depending on how well your business does if you pass away. A buy / sell agreement can make sure that your family gets a just share of any business profits. This can save their financial future if you bring in the majority of your family’s income.

The professionals at SOGO Wealth & Risk Management understand how important it is that you create an exit strategy that is beneficial to you, your business partner and your families. Let us help you create a buy / sell agreement that does just that.

To get started on a quote, contact us: