Buy-Sell Agreement Overview

One of the primary functions of a buy-sell agreement is to reflect transactions and define and protect the rights of a client. These agreements also facilitate ownership transition of a business. Your San Diego attorney will draw up a buy-sell agreement following contract law and drafting principles. A buy-sell agreement will maintain normal proceedings within your business and allow for an orderly transition if you decide or are forced to make a sale. Your San Diego business lawyer will make sure your buy-sell agreement includes important content, such as clauses explaining when the business can be sold, who can buy it, and how the sale price will be determined.

buy-sell agreement

Your San Diego business attorney will structure your buy-sell agreement to liquidate and create a market for the shares of owners who retire or become unable to work. The agreement will also ensure that an owner who has sold off their interests in the business or retired can no longer influence the business, including remaining staff and other owners.

The buy-sell agreement also ensures that cash will be available to pay death taxes and to settle estates should an owner become decreased. The agreement also fixes interest value regarding estate and gift taxes. It will also prevent an S corporation election from being influenced by a transfer of interest to an ineligible shareholder, such as an corporation.

 

Who Benefits from a Buy-Sell Agreement

Buy-sell agreements are important to everyone involved in your San Diego business sale. If you are a partner and wish to sell your interests, or your share of the business, other partners who do not wish to sell will be protected and will understand their roles after working with your San Diego business lawyer to craft a buy-sell agreement. They will also understand their relationship with the new part owner who purchases your interests.

buy-sell agreement

A buy-sell agreement can also protect everyone involved in the San Diego business sale by preventing heirs or outsiders whose interests do not coincide with those of the current business owners from gaining ownership and altering the business in a way that is not supported by remaining owners. Your San Diego business attorney can craft a buy-sell agreement that ensures remaining owners maintain control and continue to manage the business.

Key employees also gain job security through a buy-sell agreement. Part-owners who hold a minority of the interests in the business are also also protected in the same way as all remaining owners. Talk to your San Diego business lawyer to ensure all of these individuals are protected by your buy-sell agreement.

Incorporating Your Buy-Sell Agreement

There are several options regarding how to incorporate a buy-sell agreement into your corporate structure. Talk to your San Diego business attorney about whether it would be preferable, given your unique business model, to draft the agreement as stand-alone or to include it with your the operating agreement of your business. If you choose the latter option, your San Diego business lawyer will ensure that the terms of your operating agreement do not conflict with the buy-sell agreement.

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