Business Continuity Planning - Funding Buy-Sell and Key Person Funding
Business continuity planning is critical for closely held businesses, especially to prepare for events like an owner's death, disability, retirement, or partner's divorce. A buy-sell agreement provides key benefits:
Liquidity: Transforms an illiquid asset into cash.
Stability: Prevents forced sales to raise capital.
Control: Maintains ownership stability by ensuring surviving owners do not unexpectedly enter business partnerships with a deceased partner's family members.
Developing an effective plan requires analyzing business valuation, agreement terms (e.g., payout structures), and structuring the agreement (e.g., cross-purchase, entity redemption, or wait-and-see). Because these factors are complex, a comprehensive analysis by a business contingency expert is recommended over simply purchasing insurance policies.
Click on this link to download the Buy/Sell Agreement Checklist.
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