Buy-sell agreements are an important document for any partnership, as they can potentially help business partners avoid conflict and have a plan should their circumstances change. Our firm assists business owners needing buy-sell agreements written in Raleigh – here are a few answers to common questions we receive.
What Is a Buy-Sell Agreement?
A buy-sell agreement is a set of important documents that work similarly to a prenuptial agreement but is meant to help business partners handle potential disagreements and challenges that may arise in the future. A buy-sell agreement helps a business prepare for both expected and unexpected changes, such as if a co-owner wants to leave the company, becomes ill, or passes away.
What Should Be Included in a Buy-Sell Agreement?
Buy-sell agreements vary depending on the type of business you run and on whether it is backed by venture capital or not. Generally speaking, a buy-sell agreement should contain triggers and notice requirements (reasons that can trigger the opportunity or obligation of purchase, and how partners should be notified); rights and obligations to purchase; identification of the buyer(s); valuation; payment terms, and consequences of not exercising available purchase rights.
What Kind of Business Should Have a Buy-Sell Agreement in Place?
Buy-sell agreements are recommended for any business with more than one single owner, or in a partnership. By having a buy-sell agreement in place, owners can protect their business and the interests of all parties in the agreement. In addition, a well-written buy-sell agreement can be an important estate planning tool for a co-owner wishing to pass on their share of the business to the next generation while keeping estate taxes low.
Do I Need an Attorney to Write a Buy-Sell Agreement for My Business?
Operating a partnership or a business owned by multiple people can be very risky without a buy-sell agreement in place. While you are not required to hire an attorney for this process, it is strongly recommended you do so. An attorney can help you through the steps of writing a buy-sell agreement that will work for your business, and may even be able to help you craft your buy-sell agreement in a way to protect your share of ownership from excessive estate taxes.
When so much is on the line, it is best to recruit the help of a business attorney such as Davis Legal, PLLC. We have assisted business owners in Raleigh, NC, and surrounding areas to create buy-sell agreements to protect their businesses. Contact us to schedule an initial consultation at 919-756-6437.