BUY-SELL AGREEMENTS |
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What are Buy-Sell Agreements? How do they work? Who could use one?
A Buy–Sell Agreement, also known as a Buyout Agreement, is a legally binding Agreement between Co-owners of a business that governs the situation if a Co-owner dies, is otherwise forced to leave the business, or chooses to leave the business.
It may be thought of as a sort of Premarital Agreement between Business Partners / Shareholders, or is sometimes referred to as a "business will". An insured Buy–Sell Agreement is triggered by a Buyout that is funded with Life Insurance on the participating Owners' lives. It is often recommended by Business-Succession Coaches and Financial Planners to ensure that the Buy–Sell Arrangement is well-funded in order to guarantee that there will be money should a Buy–Sell event occur.
Clauses
A Buy–Sell Agreement consists of several legally binding clauses in a business partnership or operating agreement or a separate, freestanding agreement, and controls the following business decisions:
It may be thought of as a sort of Premarital Agreement between Business Partners / Shareholders, or is sometimes referred to as a "business will". An insured Buy–Sell Agreement is triggered by a Buyout that is funded with Life Insurance on the participating Owners' lives. It is often recommended by Business-Succession Coaches and Financial Planners to ensure that the Buy–Sell Arrangement is well-funded in order to guarantee that there will be money should a Buy–Sell event occur.
Clauses
A Buy–Sell Agreement consists of several legally binding clauses in a business partnership or operating agreement or a separate, freestanding agreement, and controls the following business decisions:
- Who can buy a departing partner's or shareholder's share of the business (this may include outsiders or be limited to other partners / shareholders or family members);
- What events will trigger a buyout, (the most common events that trigger a buyout are: death, disability, retirement, or an owner leaving the company) and;
- What price will be paid for a partner's or shareholder's interest in the partnership and so on.
Call Western States Investments to see if your Company should implement a Buy-Sell Agreement to protect your Company's longevity and future.
Call (951)371-7608 today!
Call (951)371-7608 today!
