It is vital to protect your interests if something should happen that could interfere with your business leadership. In many cases, a thoughtfully prepared buy-sell agreement can play a crucial role in preparation for unforeseen events.
A Minnesota buy-sell agreements lawyer could help you assess your company’s needs and goals to create a plan designed to ensure a smooth transition. Working with a skilled contract negotiations and drafting lawyer who understands the complexities of buy-sell agreements can allow you to feel confident that future changes will not cause business to suffer from undue delays or expenses.
The Basics of Buy-Sell Agreements
A buy-sell agreement is a contract that goes into effect if one of the owners of a company is no longer able to continue in a leadership role, either due to an occurrence such as death or disability or an employment decision such as a resignation or termination. Most people plan to retire at some point, so it is wise to have a Bloomington buy-sell agreements lawyer draft an agreement to prepare for that possibility.
Buy-sell agreements are especially important for closely-held companies because partners who have worked solely together often do not want interests sold to an unknown third party. At the same time, outside parties may not be willing to pay fair market value for the interest in a closely-held company. By establishing a plan for transferring interest in a business and establishing a value for that transfer, an agreement provides a means to settle problems before they arise.
Custom Plans in Minnesota
Every business is unique, so an agreement should be crafted to fit the needs of a particular business. Plans for transfers of interests may differ depending on the event that invokes the need for a transfer. Someone may wish to voluntarily transfer their interest in a business due to retirement. In other cases, they may be forced to transfer due to bankruptcy, divorce, or another event with a negative financial impact.
A buy-sell agreements lawyer in Bloomington could help business owners determine what types of transfers would be permitted in specific situations. The options may differ depending on whether the business is incorporated.
Provisions that could be provided for may include:
- Cross-purchase by surviving owners
- Redemption of the interest by the business entity itself
- The purchase of life insurance fund a redemption or cross-purchase
- Right of first refusal if a party wished to sell an interest to an outside party
- Funding a redemption through set aside funds or borrowing
- A formula for determining interest prices
Some of the key elements that should be covered in a buy-sell agreement include deciding who is eligible to buy the interest of a departing owner, what the price should be for that interest, and the types of events that will trigger the sale of interests.
Consult an Experienced Minnesota Buy-Sell Agreements Attorney
Buy-sell agreements in Bloomington are often quite complicated since they are designed to create plans for many different circumstances. An attorney experienced in these agreements can guide you through the decision-making process and ensure that everyone involved understands the ramifications before choices are made.
Establishing a buy-sell agreement provides protection from loss and helps avoid conflict that can destroy both businesses and relationships. A Bloomington buy-sell agreements lawyer can help you consider different possibilities, so you avoid the problems that arise from hurried decisions made under stress. To learn more about the process, call now for a consultation.