Many businesses are not able to survive the death or disability of an owner. A business succession strategy using a properly structured buy-sell agreement can help a business owner protect their family, and the business they’ve worked so hard to create.
- Provide liquidity for the business owner’s family
- Create a guaranteed market for their business interest
- Allow those who are interested in continuing the business to do so without interference
- Set the purchase price and terms of payment in advance
- Establish the value of the business for federal tax purposes
- Specify how the purchase will be funded
- Improve access to credit
- Provide greater retirement security
There are different types of buy-sell agreements:
Entity Purchase Cross-Purchase Wait and See Buy-Sell One-Way Buy-Sell (unilateral buy-out)