A buy/sell contract is a contract between business partners that defines the conditions under which a partner`s interest in the transaction is redeemed by the other partner or the company itself. You and your business partner can work together, but if they are dead, would you and your spouse be so compatible? For this reason, an entity should have a buy/sell agreement indicating trigger events, the value of the business (or the method of calculation), how it is financed, and how the purchase is made when a partner has a triggering event. The purchase and sale agreement assumes that the shares are sold according to a specific formula to the company or other members of the company. Typically, a buy-back agreement determines when an owner can sell his shares in the business, which can buy an owner`s shares (for example. B if the sale of the business is limited to other shareholders or includes external third parties) and the valuation methods used to determine the price to be paid. A buyout agreement can also determine whether or not an outgoing partner should be purchased and what concrete events trigger a buyout. As with many things when it comes to business, a buy/sell contract is not something that a single advisor should consult. It is recommended that you let your business lawyer design the agreement, that your CPA verify the tax impact of the operation of the agreement and that a financial advisor check the correct financing. If you do not plan, a secure fire plan will be established and will fail. Establish your buy/sell agreement at an early stage in your business and re-evaluate it every three to five years. Any small business or partnership should have a sales contract. Here is a document that describes what happens to the business when there is a particular event – such as the death or illness of a shareholder or partner – or if one of the business owners wants to sell his share.
Unfortunately, business partnerships (such as marriages) have a high failure rate depending on how statistics are calculated. When you enter into a commercial partnership, you should put in place a buy-back agreement when you enter into your partnership agreement, either as part of the agreement itself or as a separate legal document. A buy-sell contract consists of several legally binding clauses in the context of a business partnership or a separate enterprise agreement or agreement and controls the following business decisions: the sale and sale agreement is also referred to as buy-sell, buyout, „business will“ or „buy-back. The buy-back agreement ensures that other partners will be able to continue the transaction in any of these situations. In the absence of a buyout agreement, your partnership may be forced to terminate if a partner wants or needs to leave, or you could be judged. A buyout agreement is the best way to protect your business and your relationships with your partners. The value of your business will change over time, so it`s important that this is reflected in the buy-sell agreement.