Buy Sell Planning
At our most recent Thursday Insights educational event (June 6, 2013) attorney Alex Matuk, Esq. and certified financial advisor Greg Banner shared their insights into the world of the Buy-Sell Planning Agreements. In a lively discussion with the folks who attended, Alex was candid in mentioning that this is one of the most important contracts a business owner must have in place.
In case you missed it, here are highlights from their presentation:
What is a Buy-Sell?
Legal binding written contract placing specific restrictions on the transfer of stock and requires predetermined actions upon the occurrence of designated triggering events.
Why a Buy-Sell?
To control your business and its ultimate transition, whether triggered by voluntary or involuntary events.
What does a Buy-Sell planning process look like?
- Understand the need
- Select a plan type
- Value the business
- Implement the plan
Understanding the Need
Triggering Events- Death
- Disability
- Divorce
- Early exit (moving on, bankruptcy)
- Retirement
- Family business is forced to liquidate upon death or disability of the business owner
- Fair market value may be significantly reduced
- Goodwill is lost
- Family control is lost
- Income and / or benefits are lost
Death or Disability Issues
- Business
- Surviving shareholders
- Employees
- Family of Deceased
- Creates an immediate market for a business interest
- Protects against unwanted owners
- Available funds to provide for family and heirs
- Preserves, promotes and protects business valuation
- Specific definitions in formula of triggering events
- Helps reduce risks of disputes with Internal Revenue Service
- When do you or your partner plan to retire?
- What do you want to happen in the case of death or disability?
- What happens to the company and revenues if you died?
- Who should own your business interest if you died?
- Who else could run the company?
- How do you value the business?
- How would vendors / creditors react to you death?
- Would the successors be able to provide for your family?
For a more thorough look at the FULL DIGITAL PROGRAM to this Thursday Insight program, click on the link below to be directed to the information regarding this program.