The disposition of a business interest is an important decision for a business owner. There are three options a business owner can consider — gift, sell, or liquidate.
When a business owner decides to sell his or her business interest, a buy-sell agreement can help to ensure the sale is carried out according to carefully prescribed terms that are advantageous to the buyer as well as the seller.
A buy-sell agreement is a legal document among two or more owners or between owners and the business itself. It provides for an uninterrupted continuation and smooth transition of the business to the remaining owner or other purchaser.
For the selling owner concerned with income needs at retirement, disability, or death, a buy-sell arrangement helps to ensure a purchaser for the business interest at a fair price and the funds to carry out the obligation under the agreement.
These agreements may be used by any type of business entity: sole proprietorship, corporation, partnership, or limited liability company (LLC).
A buy-sell agreement is a legal agreement for the purchase and sale of a business interest. It provides for the smooth transition in control and ownership of the business. It offers a market for the business interest and a method to determine price and typically permanent life insurance is the most cost effective and efficient way to solver for this need.
Term Life Insurance can be implemented as well.