What are buy-sell agreements meant to accomplish?
By Nina Kaufman, Esq.Now I’m not going to summarize the whole of Christopher Mercer’s book on Buy/Sell Agreements for you, but he raises a lot of valuable points that bear repeating (and sharing).
First is an answer to that very question: why bother with a buy/sell agreement? Because, as Mercer writes, “they are designed to provide objective means of transferring ownership under difficult circumstances.”
And that’s what you want when tensions are high: for cooler (objective) heads to prevail. Think about it. Any time an owner needs to leave a business, it’s a rough situation (even if you’re glad to see the back of him/her). Imagine how you’d feel if your business partner:
- Quit
- Retired
- Became disabled
- Died, or
- Simply had to get the boot, whether because she was an idiot, or, more sinisterly, had her hand in the till
Chances are, you’ll be dealing with some level of shock, anger, resentment, envy, fear, or frustration (or some combination thereof) in addition to needing to work out the business terms. That combination is usually a volatile one. If you’re the one leaving, you want to get as much money as possible. If you’re the one staying, you want to pay as little as possible. All the more reason to have a fair and objective procedure put in place from the get-go.
Want to learn more about Kaufman Business Law? This is the video to watch.
