As a business owner, you can safeguard the future of your company by securing a buy-sell agreement. Also known as a buyout agreement, this legally binding agreement between co-owners of a business dictates what happens should the co-owner die, is forced to leave the business or chooses to leave the business.
Having a buy-sell agreement in place allows the company and remaining owners to protect themselves from disruption of operations, dissolution or liquidation as the result of an owner’s sudden incapacity, death, retirement. Such agreements can be set up to be funded in a number of ways, including cash, borrowing, installment sale or with a life insurance or disability insurance policy. The risk management professionals at First Baldwin Insurance can put their expertise to work for you to find the best solution for your situation.
Some important decisions a buy-sell agreement governs include:
- Who can purchase a departing partner’s or shareholder’s portion of the business
- What events will trigger the buyout (most commonly an owner’s death, disability or retirement)
- What the purchase price is for the partner’s or shareholder’s interest in the business