Why Your Company Needs A Buy-Sell Agreement

With the right people involved, there’s no other business more powerful than a partnership. A well-run partnership is fast and flexible – it runs rings around more complicated competitors. Still, since it relies so much on its leaders, it can face some unexpected risks.

One of these – and the most serious – is a partner’s passing.

A Partner’s Sudden Loss Can Throw Your Business For a Loop
If one business partner passes away, the business doesn’t simply disappear. With dedicated employees and a solid book of business, there’s no reason a partnership can’t reinvent itself. But a big step comes first: Setting things right with the partner’s estate.

The partner’s estate can seek his or her equity and other business interests. Making sure there’s a fair agreement in place can prevent all kinds of problems, from in-fighting to legal battles.

Luckily, there’s an easy way to take care of it: A buy-sell agreement.

A Buy-Sell Agreement Protects Your Company’s Future
A buy-sell agreement is an arrangement business partners enter into to protect their interests and the business if a partner passes away. Most people are surprised how easy it is to understand.

Here’s how it works:
Each Partner Needs Life Insurance: To make sure funds are free as soon as they’re needed, each partner buys life insurance on the others. This helps with business continuity because outstanding interest can be paid for right away.

A Formula Kicks In: The terms of a buy-sell agreement include a formula for valuing each partner’s interest. Putting together a buy-sell agreement early tends to reduce costs and stop outside interference.

Everyone is Happy: A buy-sell agreement lays out the steps to “make things right” with an estate almost like a will does. From start to finish, everyone is on the same page. That keeps miscommunication (and court dates!) to a minimum.

A partner’s passing is a difficult time. When all is said and done, a buy-sell agreement is the fair choice for everyone involved.

Plus, it’s so simple to do (even easier than health insurance) there’s no reason to wait another day.

The experts at Flagler Financial work with you every step of the way to plan for your company’s future. To learn about buy-sell agreements, contact us any time. We look forward to helping you.