Wondering about whether a buy/sell agreement is appropriate for your situation?
Its purposes are broader than many owners realize. Here's a brief primer...

A buy/sell agreement covers the transfer of your business interest to new owners. It includes the conditions of business transfer and the method of valuation.

More specifically, a well designed buy/sell agreement should:

1. Ensure the continuity of your business. Succession is about transitioning your business to the next generation. That may be to a child, current manager, outside owner, or even to a competitor or larger entity expanding their business interests.

2. Provide a ready market for your business in case of premature death or disability. Managing a dynamic business is a full-time obligation; a buy/sell agreement facilitates transition through the worst of circumstances.

3. Restrict/prevent unwanted persons from acquiring an interest in your business. Some owners want to assure the ownership of their business or farm remains within the family. A buy/sell is the perfect avenue to assure this outcome.

4. Establish a purchase price for the business, as well as a valuation method for estate planning. An agreement written in advance protects heirs by establishing a method of valuation.

5. When partners are involved, a buy/sell agreement will detail dispute resolutions. Relationships involve the imperfections of human nature. In no place can this be more prevalent than in a business situation involving money, time, family, and the demands of the customer.

Alternately referred to as business continuation, shareholder, stock redemption, partnership, or retirement agreements, buy/sells are a necessary succession planning tool.