Jul 10, 2014
Like insurance, a buy-sell agreement can protect a business owner and his or her family from unforeseen problems, such as an untimely death, disability, divorce or a business partnership gone wrong. Most companies buy insurance, but not many take the time to properly prepare a buy-sell agreement. And if it’s not a quality, forward-thinking document, many business owners find that it may not cover all the bases.
We can trace most buy-sell agreement problems back to one issue: Valuation. Failing to carefully consider valuation-related issues can create extra complications for shareholders or their families at a time when they can least afford to address them. Once an agreement is in place, owners need to periodically revisit their buy-sell agreement to be sure it still makes sense. Is it still relevant to the business and the needs of the owners? If not, the agreement becomes outdated and may become unenforceable.
The following list highlights some of the main valuation points to consider when drawing up a buy-sell agreement or revisiting your existing agreement. Review these issues and consult with a valuation expert and/or attorney to save some undue future stress and avoid leaving money on the table.
Payment Issues
In Summary
Addressing valuation issues when writing a buy-sell agreement can prevent future problems. Whether drafting a company’s buy-sell agreement for the first time or revisiting an existing one, consider this list to help ensure the agreement will provide the desired outcome.
For assistance in developing or revising a buy-sell agreement, contact us at 913-648-0185 or mike@ok-om.com.