HOW TO SELL A BUSINESS WHEN OWNERS CAN’T AGREE
One of the common mistakes I often see with business startups and even those that have been operating for some time is the failure to plan for the possibility of a business dispute between partners or shareholders as the business develops and grows.
The excitement of starting a business with the idea of growing and becoming prosperous and making millions of dollars along the way and perhaps selling it off one day in the future for a huge sum and walking away with retirement funds forever often gets in the way of rational thinking. Partners and shareholder usually all start out with the best of intentions and work hard to make the business successful. Then, along the way “life” happens and disputes occur about management, which direction the business should take, the death of a major contributor occurs or perhaps a family issue such as a divorce creates a strain and causes business disruption.
Unless a plan is in place any of the above factors or some others that might crop up can tear the business apart, destroy all the hard earned success and, unfortunately, often causes the business to fail. One of the ways to ensure a smooth transition in case of such an occurrence is the creation of a buy sell agreement for the acquisition of the ownership interest of the partner or shareholder.
A buy-sell agreement is like an insurance policy between the partners or shareholders to ensure that in the event a dispute arises there is in place an agreement to control how the parties will part ways amicably and fairly and all parties are protected with their respective interests.
It should outline who gets what and how much money will be exchanged in order to solve the existing problem.
Just as important is the fact that a buy-sell agreement will help to avoid possible lawsuits and other unpleasant occurrences. It will also allow for the smooth transition of business without disruption to day to day business operations.
Although one can find a form and fill in the blanks for a typical buy-sell agreement, it is not advisable to do it that way as any reliable buy-sell agreement should reflect the particular circumstances that apply to the current business operation and the peculiarities of the parties involved. Get an experienced business or insurance attorney to assist you if you feel a buy-sell agreement is needed for your particular situation.
Our office can be of assistance in helping to create and put in place your buy-sell agreement. Contact us