Why do you need a strong buy-sell agreement? What impact will the buy-sell agreement have upon the life of your multi-owner San Diego business or partnership.
What is a Buy-Sell Agreement?
In essence, the buy-sell agreement is an contract that anticipates and addresses the process for handling unexpected developments when there is more than one owner, member, shareholder or partner. What protects the ongoing management and voting control of the business? What specific process or strategies protect minority ownership positions and key workers?
The buy/sell agreement is a critical business document. It establishes how the company will handle the normal bumps of life and business down the road, and in many cases those bumps come earlier instead of later.
What is a “Triggering Event” and How Does That Affect the Management and Control of Your Business?
A triggering event is a specific circumstance that could affect an owner or group of owners in your company such as death, disability, personal bankruptcy, divorce, disability or the need to remove an owner. How will changes in the life of an owner impact the ongoing operations of the business? How do events such as divorce, incapacitation, bankruptcy, or death impact the company.
What happens if one of the owners needs to sell their interest in the company? How much is an owner’s position worth and how is this established? How is the balance of power to be maintained and how does one prevent a hostile takeover? What happens when one of the principals in the company isn’t pulling their weight or holding up their end?
For example, how do you prevent the former spouse of one of your business partners from owning a large portion of your company and voting rights after a divorce (and having to deal with them down the road as a result)? What happens if we need to bring in another investor, or partner? What happens when one of the owners dies – and how do the surviving owners and the company itself maintain management of the company and control over that ownership interest while providing appropriately for the deceased owner’s family and beneficiaries?
Cutting Corners in the Process Leads to Expensive Disputes Down the Road
We are continually reminded of the extensive costs that San Diego business owners pay for trying to keep costs down by doing a lot of the business forms such as the “buy-sell agreement” themselves (via form and download sites) in the startup phase of a business. Cutting corners in crucial business contracts will always result in expensive business disputes down the road.
Why Do You Need a Strong Buy-Sell Agreement For Your San Diego Company?
Why do you need a strong buy-sell agreement for your San Diego company? The buy sell agreement will make a significant impact on the life, management and control of your San Diego business or partnership. Life happens. Business happens.
Most “off the shelf” or downloaded documents don’t begin to address these real life scenarios, and the cost of fixing it down the road is exponentially more expensive, time consuming and distracting than doing it correctly now.
We have a proprietary library of proven, battle-tested buy-sell agreements developed across our more than 40 years of service to the San Diego business community. We save our clients time and money and provide them with the strongest possible buy-sell agreement by tailoring an existing, proven contract to meet the specifications and requirements of their unique circumstances.
We invite you to review our podcast Episode 9 – Buying and Selling a Business or Its Assets as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 today for a free consultation. Let’s work together to review your existing corporate documents and agreements and build a plan that will help you to survive any challenge, and thrive.
