6 Things To Know About Buy-Sell Agreements
Having a formal agreement can define a desired exit strategy and ownership succession plans, providing a roadmap in the event of a death, divorce or disability, says Rachel Flaskey, a senior manager in the valuation services practice of Baker Tilly, a top 15 accounting and advisory firm in the U.S.
“Those are all circumstances that can be planned for somewhat,” she says. “But you also have the unforeseen circumstances: an argument or the shareholders aren’t clicking anymore. Or maybe you want to allow future owners into the business.”
A buy-sell agreement allows entrepreneurs to know up front who can buy in to the business and how the process will work, and it provides opportunities to talk about possible scenarios rather than forcing owners into expensive litigation down the road.
It’s one form of a business continuity tool,” Flaskey says.