How’s your buy-sell agreement doing?
Abstract: Many ownership transition issues can be resolved with a buy-sell agreement, which is a contract among business owners that sets parameters for the transfer of interests in the business. The contract determines the value of the business, or defines the valuation method to be used, and outlines when and to whom the interests can be sold. A buy-sell agreement can preserve or transition the management and control of a company in times of change, and can offset potential conflicts among owners and family members. It can also create a market for a withdrawing owner’s business interest and establish a succession plan. There are two kinds of buy-sell agreements: cross-purchase and redemption.