If you are a business owner in Arizona, you may think you have all of your ducks in a row with a solid business model, but do you have a contingency plan in place to keep your business in the right hands?
A buy/sell agreement legally outlines the ownership succession for your business in the event of planned things like retirement and share selling or unexpected things like death and divorce. Here are four things to consider about buy/sell agreements.
1. You decide which events are important
When creating a buy/sell agreement, you and other interested parties, such as business partners, can decide which events should activate the agreement. For example, you might consider the death of a partner to be a triggering event.
2. Time is of the essence
A buy/sell agreement is a proactive tool to protect your business. For this reason, it is crucial to have one in place before life-altering scenarios play out. This can also minimize the heated emotions that can arise at the time of the triggering event.
3. You should get a business valuation
By adding a neutral third-party business valuation clause to your agreement, you can reduce or eliminate disputes among interested parties over what your business is worth when someone sells their share.
4. Taxes matter
Understanding the law regarding business sales can help to minimize tax implications for all involved, so bringing in an expert to help you during the buy/sell agreement creation process is a good idea.
A buy/sell agreement is a helpful tool that you can use as a business owner to protect your assets after life-changing situations.