- Secure a buyer for the business
- Establish the ground rules for the transaction and the source of funding
- Establish the trigger for the sale (for example, death, disability, retirement, divorce, bankruptcy, or termination)
- Provide an income stream for the seller
- Provide liquidity for the seller’s estate
- Create continued employment incentives for employees intended as successors
Entity Types: All closely-held businesses could benefit from a buy-sell agreement: solely-owned, family-owned, owned by unrelated parties, professional corporations, regular corporations (C or S), partnerships, and LLCs.
Business Value: Any value. Age Demographics: All business owners should have a buy-sell agreement. Age related issues may include cost of insurance funding and time available to establish sinking funds.
Relevant Factors: Owners’ ages in relation to retirement, health status, vision for continuity of business, and cash flow available for funding agreement.