Your business might be in good hands today, but what happens if adversity comes your way? A buy and sell agreement might come in handy.
Even if you’re confident that everything’s running smoothly with your business today, that can all change in the blink of an eye. No one likes to think about worst-case scenarios, but the reality is they can happen – for example, a key person in your business might die or otherwise become incapacitated.
Below are five reasons why it’s crucial to have a buy and sell agreement in place before something happens.
In this situation, you will probably need a plan to transfer that person’s power to someone else. The best way to do this is with a buy and sell agreement, which stipulates who will purchase what aspects of the business and for how much. Below are five reasons why it’s crucial to have this paperwork in place before something happens to your company’s leadership.
1. Preventing major confusion in a time of crisis
Dealing with a major setback, like the death of a key person in your business, can be a time of confusion. People don’t know the answers to basic questions – who’s in charge? Whom do I report to? With a business buy and sell agreement in place, you should find answers to these questions quickly and automatically.
2. Dealing with the life insurance fallout
A lot of business partners take out life insurance policies on each other so that when one dies, they can deal with the financial repercussions easier. When this happens, there are sure to be complicated details of the insurance policy to figure out. A buy and sell agreement can make it easier to resolve such issues.
3. Avoiding potentially messy legal disputes
Power struggles over the control of a business can be messy. Fortunately, a buy and sell agreement preempts any disputes by making it easy to figure out who gets control of what during a time of crisis. This will save everyone time and money that may otherwise be spent on litigation.
You don’t want the families to worry after a business leader’s death.
4. Protecting everyone’s family financially
If a member of your leadership team dies, the last thing you want is for the financial hardship to make matters even tougher on the departed’s family members. Fortunately, if you have a contract for selling your business to a new owner, it will make it easy for the family to make it out of the business with their finances intact.
5. Maintaining continuity for your business
You don’t want anything to stop your company from working productively – not even a leader’s death. Fortunately, at Turnbull Hill Lawyers, we make it easy for you to get in touch with business lawyers who can prepare a buy and sell agreement for your business. This way, all the legal matters will be taken care of, and you and your team can focus on the business.