How does a corporate buy-sell agreement deal with the death or disability or termination of employment of a key owner or owners of a closely held corporation?
Your business may be the primary asset that provides income and security for you and your family. The owners, shareholders, of many closely held corporations understandably find it hard to plan for the risk of the death, disability, or voluntary or involuntary termination of employment of the company owner(s). Buy-sell agreements include provisions governing those situations and legally enforceable restriction on the transfer of stock. They provide for the redemption of stock by the corporation or purchase by one or more of the remaining shareholders. For the selling shareholder, the agreement assures a buyer for his stock at an agreed formula to determine a fair price. If a minority shareholders interest is being sold., the provision for a buyer at fair market value is peace of mind in situations where minority positions in closely-held businesses might not sell at all or for a very low price. Buy-Sell agreements allow for withdrawal of equity from a company, and, if properly drafted,
Related Questions
- How does a corporate buy-sell agreement deal with the death or disability or termination of employment of a key owner or owners of a closely held corporation?
- What plans are needed to assure the business continues upon the death or disability of the owner?
- Can events such as retirement or disability be part of a buy-sell agreement?
