Secure your Business’s Future

By Jana Kumaralingam

Why Business Partners Should Always Have Buy/Sell Agreements

Pete and Richard’s journey of turning a small injection moulding business into a $2 million enterprise seemed like a dream come true. Little did they know that the key to protecting their hard work would lie in a simple yet powerful tool – a buy/sell agreement.

Two decades into their business venture, tragedy struck when Richard, one of the partners, unexpectedly passed away. This unforeseen event could have posed significant challenges for the business, but thanks to the foresight of a buy/sell agreement, the business was shielded. Richard’s family, uninterested in the business, was bought out by Pete using funds generated through life insurance under the shareholder protection clause.

This real-life scenario prompts a critical question for every business owner: What would happen to your business if you or your partner faced sudden tragedy? This question serves as a wake-up call for business owners to consider the importance of having a plan in place.

Why You Need a Buy/Sell Agreement

  1. Ensuring Fair Value:
  • Protect your family by ensuring they receive a fair price for your shares or business interest.
  • Avoid the use of personal cash reserves, selling personal assets, or taking substantial loans.

 

  1. Securing Future Ownership:
  • Create funds and the ability for the sale and purchase of a business interest.
  • Facilitate finding future owners for the business.

 

  1. Smooth Transition of Ownership:
  • Provide means for existing owners to receive a fair price for their business interest.
  • Prevent potential conflicts by establishing a clear process for ownership transition.

A buy/sell agreement is not just a legal document; it’s a lifeline for your business in times of unexpected events. As illustrated by Pete and Richard’s story, this simple agreement can make all the difference between chaos and continuity. Don’t wait until it’s too late – secure your business legacy with a buy/sell agreement today.

How can we help?

At SEIVA, we understand the unique needs of your business. Collaborating with your legal team, we create a customised succession plan that includes a comprehensive buy/sell agreement. Check out the attached checklist for guidance on the steps you should consider in the near future. Don’t leave your business’s future to chance – start taking proactive measures today.

Download the checklist here

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