Buy / Sell Agreements
A buy sell agreement is an incredibly important document for a small business. These documents describe the terms under which business assets will be purchased or sold in the event of various, unforeseen circumstances, such as death or divorce of one partner. With a buy sell agreement, the business can continue to operate normally. Without one, disputes over value, assets, and liabilities, can obstruct the everyday practices of your small business ultimately devaluing it.
There are many aspects to consider when creating a buy/sell agreement, including
- Triggering events: Why is the buy out happening?
- Mechanisms for funding a buyout: Will there be an additional partner? Is there a bankruptcy or a bank loan?
- Manner of valuation of the business: What real property does the business hold? Does the buyout assume that the business will continue running?
- Appraisal, arbitration, or other dispute resolution forum: Can we avoid costly litigation? Are there incorporated structures to resolve disputes between partners?
- Tax considerations of a buyout.
Because there are so many legal facets to a buy/sell agreement, an experienced small business attorney can mean all the difference to protecting your business and your investment. The buy/sell agreement can be incorporated into either the business contracts that define your business (entity formation) or it can be a stand-alone document.
This agreement not only protects your business, but also gives you and your partners flexibility and understanding in the event that one or more partners wish to leave the business. The partners who remain with the business will understand their roles in the new business, and any new partner’s relationship with the business will be negotiated and understood by all parties.
The Law Offices of Steven Brian Davis have over thirty years serving the small business community of North County, San Diego. A small business ourselves, we understand the risk and need to protect personal assets.
A buy sell agreement is the business equivalent of a will or living trust. Just as you wouldn’t leave your personal assets vulnerable to a lengthy and potentially damaging process of seizure and division of estate, businesses should protect themselves in case of unforeseen events.
Call The Law Offices Of Steven Brian Davis today: (858) 451-1004
