Does your business need a Buy/Sell Agreement?
How well is your business protected?
It takes years of hard work to build a business. But all the hard work can be undone very quickly if one of the business owners dies or suffers a serious disability. This can put a tremendous strain on a business and create financial problems for business partners and family members.
What is a Buy Sell Agreement (BSA)?
A BSA is an agreement between the individual owners of a business (“Principals”) about what would happen to their ownership interests in the event that one of the Principals suffers an unforeseen event such as death or disablement.
The funding of a BSA is generally done through insurance.
How does a Buy/Sell Agreement benefit a business owner?
It provides the funding for the purchase of the departing owner’s share of the business.
Peace of mind for the continuing partners/owners/shareholders, offering a clearly defined contingency plan for the business.
Pacify creditors & stabilise the business, allowing the owners to focus on running the business.
Reduce the chance of disputes between continuing business owners and a deceased owner’s estate.
What is a BSA not designed to do?
Address foreseeable situations, such as planned retirement
Replace lost profits of the business due to the death / disablement of a Principal; or replace lost income of a disabled Principal
See Case Study 4 Attachment