If your business has two or more owners, you need a Buy-Sell Agreement.
A buy-sell agreement is simply a contract between two or more business owners that formally documents contingency plans if a life changing event occurs. Some people refer to these agreements as “prenups” for business owners. In the agreement, the business owners agree upon what happens to the ownership structure of the company in the event of one owner’s death, divorce, disability, retirement or other life changing events.
Many business owners don’t realize until it is too late the importance of a buy-sell agreement. For example, if an owner gets divorced, the business may become hostage to the marital dispute. Or if an owner dies, the surviving business owner(s) may inherit heirs for business partners, who care little about whether the business survives.
Without a buy-sell in place, you are opening yourself and your business up for unknown risks. Protect yourself and your business from the unknown future with a buy-sell agreement. Ensuring that critical events are properly covered is essential to the long-term survival of your business.