Why should you consider a buy-sell agreement?

On Behalf of | Sep 3, 2020 | Blog |

Buy-sell agreements can ease your mind as a business owner. They specify succession plans in the case of many events, depending on how you word them. It can provide security and organization ahead of time to prepare you when confusion or shake-ups occur. 

The strange thing is many businesses overlook these agreements as important. Forbes notes that nearly three out of four business owners lack a documented succession plan that may include a buy-sell agreement. Some benefits include: 

They get ahead of the crisis 

The earlier business owners and partners draft a buy-sell agreement, the earlier that all parties know the ground rules. Drafting the agreement when the business is budding or strong can ensure that, no matter what personal stakes or emotions arise between people, the business has a strong road map for survival and succession. 

They determine how to value your business 

Determining valuation methods and putting in clauses determined to hire a valuation expert at times of succession can help pinpoint the exact value of the business rather than guesstimating with homebrew calculations. Companies with complicated operations may find things made easier by establishing valuation ahead of time. 

They may help avoid unnecessary taxes 

Considering tax matters in the buying or selling of the company can leave business owners with reduced shares. With the right agreement, there are certain ways that a sale or buyback can either minimize taxes or create payment plans over time. 

When determining what is best for the business, it is vital to treat it with care and consideration. Do not just get it right—get it in writing. 


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