Learn about the features and benefits of a buy sell agreement when considering the sale of your business.
- A buy sell agreement is an essential part of a comprehensive exit strategy.
- The agreement should be treated as a living document that will evolve as a business moves through its life cycle and the owners’ personal circumstances change.
- Buy-sell agreements have many benefits, the most critical of which is to help current owners maintain control and to preserve the marketability of ownership interests.
An owner’s interest in a closely-held business often constitutes a significant part of his overall wealth. For an owner who is concerned about preserving the value of this business capital for himself, and/or as a legacy for his family, a well-drafted buy sell agreement by and among all of the owners is critically important.
From a business’ inception up until implementation of a final exit strategy by the continuing owners, a buy sell agreement is an essential tool to:
• Preserve the business’ long-term viability by preventing control from passing to unwelcome and potentially disruptive parties
• Ensure that each departing owner (or his or her estate) receives a fair price for his or her interest
• Establish a funding source for the purchase of each departing owner’s interest
Primary benefits of a buy sell agreement
Buy sell agreements have many benefits, one of the most critical of which is to help current owners maintain control and to preserve the marketability of ownership interests.
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