Employee Benefit and Business Life
Every co-owned business needs a buy-sell, or buyout, agreement the moment the business is formed or as soon after that as possible. Every day that value is added to the business without a plan for future transition, it increases its financial risk. A chief concern of the owners of a closely held business is what would happen to the business if one of the owners could no longer continue. Surviving owners generally want to ensure a continuity of ownership and management without having the departing owner’s successor thrust upon them. Nor do they want to unduly compromise the liquidity needs of the business by funding a significant buyout. Disabled or deceased owners would want their families compensated fairly for their share of the business.
By working with AIB, we will help you create a properly drafted buy-sell agreement that will help you achieve the following goals by:
Providing that upon the occurrence of a specified “triggering event,” owners are guaranteed that their interest in the business will be purchased; Providing that the owner’s interest must be sold to the company, the remaining owners, or a combination of the two; Providing a mechanism whereby the purchase price may be determined by market conditions in existence upon the occurrence of the event; Providing a funding source, primarily through insurance policies, so that the liquidity needs of the business or its owners will not be onerous; and Establishing a valuation of a deceased owner’s interest in the business for estate tax purposes