Protect Your Business with a Buy-Sell Agreement
A buy-sell agreement is one way to help ensure the continuation of your business, guarantee a buyer and help make sure your family is taken care of financially.
As a business owner, you care deeply about what you built and want to plan for every contingency. So, it’s important to plan for when you retire, a buyout, or even the death of a business owner. While it may not be the easiest thing to think about, life insurance is something that can help ease the way for succession planning.
Protect your business with a Buy-Sell Agreement.
What is a Buy/Sell?
This is a legally binding agreement that requires one party to sell, and another party to buy a particular ownership interest in a business.
These agreements can be designed to protect the business from certain triggering events, the most common of which are often referred to as the five D’s — death, disability, divorce, departure (either voluntary or involuntary) and disqualification (pertains to malfeasance that would require an individual to be removed from an ownership position).
Business Evaluation
What is your business worth? Only one third of business owners say they have had their business valued in the last three years. From the day you open the doors, to the day you decide to transfer or sell the business, it’s a good idea to know how much your business is worth.
Business Succession Planning
With business succession planning strategies, like with other estate planning situations, life insurance can provide an immediate lump sum of money called the death benefit.1 That sum can be used by beneficiaries to buy out the deceased owner’s share of the business.
There are a number of business succession planning strategies, but a common strategy is a “buy-sell agreement.
This is when one party (or sometimes multiple parties) agrees to buy the deceased owner’s share of the business at a predetermined price from the deceased owner’s estate or heirs. Two forms of buy-sell agreements are a cross-purchase agreement, where the remaining owners or partner purchase a share of the business, and entity-purchase agreements, where the business itself buys the share of the deceased owner.
Plan Your Business Success
Schedule a complimentary consultation to learn more about how a Buy-Sell Agreement may work in your business.