One of the most striking features of our economic times is the sheer volume and intensity of change occurring in the business world, and no where is this more striking than with respect to owners of closely held businesses.
Both negatively and positively, businesses are evolving or unfortunately unwinding in the face of both economic hardship as well as opportunity. Owners of such businesses are often affected similarly, with some wanting or needing to exit certain ventures while others see the opportunity and are willing to undertake the risk to rise above in difficult times.
In spite of such obvious comings and goings, my experience is that few businesses have even skeleton plans to addresses such changes in their ownership structures, with perhaps less than 25% having some form of buy-sell agreement.
A buy-sell agreements are a necessary, not optional, first line of defense against the insolvency, bankruptcy, or divorce of a co-owner. As important, it’s a means of addressing sales by co-owners who need or want “to get out”. Nothing worse than picking up a stranger as a co-owner, whether a new buyer or even a creditor of one of the current co-owners.
With a properly drafted buy-sell agreement, all of these events may be handled in an orderly and controlled fashion. There are enough surprises in today’s economy without a potential merry-go-round of ownership.
Make sure you have protected yourself, your co-owners, and your business by having a comprehensive buy-sell agreement.