What is the importance of buy-sell agreements in San Diego and Southern California? Buy sell agreements are one of the most important documents for any small business, closely-held company or LLC. The buy sell agreement may be one of the most important business contracts you or your business partners ever sign and it is important to make sure this important document is well-crafted at the outset of your company and regularly updated during the life of any small company.
What Is a Buy-Sell Agreement?
The buy-sell agreement documents the intention of the partners or members in any small company or LLC while protecting the short and long-term viability of the company in the event of an unexpected development including, but not limited to:
- The inability of a partner to make a required capital contribution
- The death of a partner
- Serious injury or incapacitation
- Divorce
- Personal bankruptcy of a partner or member
These events are often referred to as “triggers” in that they trigger specific legal steps when one of the identified events occurs.
The Problem with Generic Buy-Sell Agreements
Many generic forms on download sites use boilerplate language, much of which may not reflect the unique laws of the State of California, let alone the best interests of the partnership. The experienced business formation and partnership attorneys at the Watkins Firm guide you and your business partners through crucial conversations at the outset of the partnership, when everyone is pulling together and looking out for the best interests of the new enterprise. Our proven buy-sell agreements provide income for the estate or trust of a partner facing a life challenge while protecting other partners and members as well as the company itself from outside influences, unwanted (beneficiary/spouse) partners or partnership disputes down the road.
How is an Effective Buy-Sell Agreement Structured?
Usually this document will define how a stakeholder’s interest is to be valued, and the specific triggers which open the door to a process which allows an owner or group of fellow owners to buy out the exiting stakeholder’s interest, a “put right” for a selling partner to force the other stakeholders in the company to buy out their interest, or a mutual obligation all members of the partnership to assist in the sale of a partner’s interest.
The Importance of Buy-Sell Agreements in San Diego Small Businesses
It is hard to overstate the importance of buy-sell agreements in San Diego small businesses. The Buy-sell agreement is a critical corporate document and it is important to have your buy-sell agreement and other corporate documents reviewed every year or so to ensure they are kept up to date with changes in the law as well as developments within the business itself. We invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today to discuss your unique business interests, and how a carefully-crafted buy-sell agreement by the Watkins Firm can protect you and your business in the months and years to come.
