Business Transfers & Succession
I assist business owners with the transfer of their businesses to the next generation or other parties. I can assist anyone with a business who wishes to transfer it today or at some future date. Often times, business succession plans start with a buy/sell agreement.
Typically, buy/sell agreements are used by shareholders for purposes of restricting the transfer of corporation interests to persons outside the original shareholder group. In addition, a well-drafted agreement regulates options and obligations for the sale of a shareholder's interest to the corporation and/or the other shareholders upon the occurrence of certain events. Such events include the death of a shareholder, the permanent disability of a shareholder, the termination of a shareholder's employment (either with or without cause), as well as resignation and retirement. The typical agreement also includes a number of regulations pertaining to the calculation of the purchase price of shares, as well as practical provisions pertaining to interest transactions and the resolution of deadlock situations. Additional provisions relate to the payment process and include extended default procedures, pledge of stock and special rules pertaining to the failure of either a seller or a purchaser to fulfill their obligations according to the agreement.
Buy-sell agreements serve important functions from the perspective of both the corporation and the individual shareholders. Given that the founding shareholders agreed to be in business with the other shareholders, such agreements generally control who can become a shareholder of the corporation. Thus, a key component of a buy-sell agreement usually places restrictions on a shareholder's ability to sell or transfer her shares so that the co-owners will not involuntarily become business partners with someone they may not otherwise want to be partners with—including a shareholder’s family.
There are two commonly used methods to structure buy/sell agreements. The first is known as an entity purchase plan. For corporations, it is commonly referred to as a stock redemption plan. The second is known as a cross purchase plan. What's right for your business will depend on a number of factors.
The information contained on this website is provided solely as a summary of the services offered by my firm, and is not intended as legal advice. It consists of only a brief overview of the various services that I provide. Laws in the area of business and estate planning change frequently. Please do not rely on the information on this website for your business or estate planning needs. Each company, individual, couple, and family has unique needs. It is always advisable to consult an attorney when dealing with any of the issues discussed herein.