The Elements of Buy-Sell Agreements

Elements, parts, or various aspects of a Buy-Sell Agreement that business co-owners should consider when creating a Buy-Sell Agreement:

List all stockholder’s names.

Number of shares and voting rights owned by each stockholder.

Guidance for the transfer/purchase of a stockholder’s shares.

Covenants and considerations.

Restrictions regarding the transfer, purchase or encumbering the company’s stock.

Actions to be taken in the event of a shareholder’s divorce or termination of a shareholder’s employment.

Defining the obligation to buy/sell shares from an estate.

Purchase of insurance to ensure ability to meet the obligations to purchase shares.

Specify whether the purchase of stock will be paid in lump sum or by installments.

Define the remedies for breach of the agreement.

Provide actions to be taken in the event of payment default.

The right to inspect books and records until transfer of the stock is complete.

Amendments and notices for offers or legal matters.

Enforceability of the agreement.

Describe the binding effects.

Provide arbitration procedures for disputes.

Process for dissolution, or liquidation, of the corporation.

Maintaining the premises during a transition.

Preserving representations and warranties.

Outline the terms of transfer.

Provide an example of the Bill of Sale.

Other names or terms for Buy-Sell Agreements:
Business Will
Buyout Agreement
Entity Buy-Sell Agreement
Cross-Purchase Buy-Sell Agreement
Wait and See Buy-Sell Agreement
Disability Buy-Sell Agreement

Tips:
1. Insurance premiums that will fund the buy-sell agreement might be deductible – check with your CPA.n
2. Make sure that the company’s business valuation is performed by a valuation company that has expertise in that specific industry.
3. When creating a buy-sell agreements consult a licensed professional because these are critical documents that should not be taken lightly.
4. Buy-sell documents need to address the proper laws and regulations, which vary from state to state.

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The information provided by Business Funding Secrets is considered strictly as an easy reference. As the reader, you are solely responsible for contacting the appropriate expert or professional that can assist you with your Buy-Sell Agreement or other tasks. It is your responsibility to conduct your own due diligence, make your own decision to work with them, and accept the terms they offer.