At J&J legal, we are dedicated to protecting your assets, both now and in the future. Buy-Sell Agreements ease the transfer of ownership under disruptive circumstances, including death, retirement, employment termination, loss of professional license, disability, divorce, bankruptcy, and insolvency. These agreements provide for the purchase and sale of ownership interests in the business at a pre-determined price and provide continuity of ownership and management. Buy-Sell Agreements are advantageous to the business because they restrict the transfer of ownership interests to unwanted third parties and provide a method for funding the buy-out of a withdrawing or deceased owner’s interest. For the deceased or withdrawing owner, a Buy-sell Agreement provides a market for an otherwise unmarketable asset, provides liquidity for the withdrawing or deceased owner’s estate, and ensures the owner receives a fair price for the business interest. Disabled or retiring owners also benefit from Buy-Sell Agreements because they provide a source of cash flow and reduce potential conflict with remaining owners. There may also be tax advantages associated with a capital transaction. A tax attorney should be consulted for specific tax advice regarding your Buy-Sell Agreement. For continuing owners, Buy-sell Agreements provide certainty, a source of long-term financing for the departing owner’s equity interest, and peace of mind knowing potential conflicts among active and inactive owners will be minimized or eliminated entirely.
At J&J Legal, we deliver the personal service clients expect from a boutique frim. This entails an in-depth discussion of your business objectives and available options in order to draft a Buy-Sell Agreement that fits the unique needs of your business, considering various factors such as:
- The type of entity; i.e., C corporation, S corporation, partnership, LLC or other.
- The size of the entity, in volume of business, number of employees, assets, etc.
- The value of the entity as a going concern.
- The value, book value or liquidation value of the underlying assets.
- The relative percentage or other ownership interests of the owners.
- The ages and health of the equity owners.
- Financial condition and liquidity of the owners.
- General health of the owners.
- Ability of the owners to obtain life insurance in adequate amounts, at acceptable premiums, and otherwise on acceptable terms and conditions.
- The commitment of owners to the business and importance of their participation in the business.
- Legal considerations that could impact the ability of a corporation to make dividend distributions or redeem stock.
- Provisions of loan agreements and similar documents that affect the entity’s capital structure or financial ratios.
- Family relationships between the owners.
- The status of the working relationships between the owners.
- Multigenerational planning for the business and the extent to which current ownership intends to remain active in the business.
- Licensing and other legal or qualification requirements.
Because there are several types of Buy-Sell Agreements, selecting the right type will impact the effect and outcome of future events. If you are a business owner wishing to pre-determine future shareholders and owners, contact J&J Legal for a free consultation to discuss your options. We draft Buy-Sell Agreements for various types of business entities, including corporations, limited liability companies, partnerships, and professional practices.