Buy/Sell Agreements

You, your family, staff, suppliers, customers and other stakeholders are all going to be in a more secure place as soon as the agreement is established and the funding is secured through an insurance policy.

Business Wills protect the business against the loss of key shareholders or owners.  If a key person dies, retires, becomes totally or permanently incapacitated, effected by trauma or becomes critically ill, then the outgoing owner (or their estate) will be fairly compensated for the transfer of their rights to the business.

Basically, the Business Will is an insurance policy for a key person’s share in a business so that if that key person is no longer involved, then his/her shareholding is transferred in exchange for an agreed value of that share. The agreed value is covered by an insurance policy.

• If you or one of the owners were to die, any charges or loans your business has may be immediately callable by the lender. A business succession plan will ensure that debt can be retired by the continuing owners;
• It should prevent a deceased owner’s spouse or estate from selling their share of the business to a third party that may be unsatisfactory or unknown to the continuing owners;
• It should avoid the possibility of a deceased owner’s spouse or child deciding against the wishes of continuing owners by becoming an active hand-on partner rather than taking the pay-out;
• Each owner knows in advance how the business will be valued and what their respective share will be. This should result in less risk of a former owner, or their spouse or estate taking legal action over a valuation or pay-out figure;
• It ensures the control of the business or its assets are not frozen due to legal difficulties created by the former owner, their spouse or estate;
• It ensures that the deceased owner’s spouse or family does not take their legal right to claim a share of the business profits without having to work the business; and
• It will provide security for investors, shareholders, directors, staff and creditors.

Planning ahead for when you or another owner leaves your business is extremely important for you and the business.  It allows for a smooth transition by ensuring that there are adequate funds to fund the buy out of your share (or a key person’s share).