An important part of establishing a new business is to plan for the time when the partners or founders seek to remove themselves from the organization. Whether the break-up of a business is the result of a dispute, death, disability or retirement, planning for these eventualities can ensure the survival of the business even after key players are no longer involved.
Eventually, one of the co-owners of a business will have to leave for one reason or another, either because they leave on their own or because they are forced out. Regardless of the possible reasons for a departure, it can be advantageous for co-owners of a business to set up buy-sell agreements to ensure an efficient, comprehensive, and effective departure. With the aid of a qualified attorney, you can ensure your buy-sell agreements are legally sound and binding in a way that will not lead to future legal liabilities.
Developing a buy-sell agreement requires an individual to consider his or her goals for the business after their death. When we consult with clients seeking to ensure the continuation of their businesses, we consider the following when developing buy-sell agreements:
- The circumstances that would trigger the agreement, e.g., is it the disability or death of a partner, or are there other factors;
- Mechanisms for valuing the business;
- Funding a buy-sell agreement, usually accomplished by life insurance on the partners;
- Determining who has an interest in the future of the business and thus who can buy out a departing partner’s share;
- Understanding how events such as divorce or bankruptcy could trigger the implementation of a buy-sell agreement and
- Learning the tax implications of each option.
In order to be useful, a buy-sell agreement must incorporate ways to address these issues and others. Our attorneys have the business knowledge and experience to draft these agreements to the specific circumstances of each client.
At the Woodlands law firm of Hopkins Centrich, LLC, our lawyers assist clients with all aspects of business succession planning, including the development of buy-sell agreements. Such agreements protect the other partners and stakeholders and provide interested banks with the knowledge that the business will continue. As attorneys with a focus on business law, we draw up effective buy-sell agreements designed to carry out our clients’ plans for the future of their businesses.
Joseph Centrich has 15 years’ experience dealing with complicated business relationships which could benefit from the use of a buy-sell agreement. If you are in the Woodlands, Conroe or the Houston area and have a closely held business, contact Hopkins Centrich to speak personally with a business law attorney.