An increasing number of business owners in the baby boomer generation are planning to transition out of their business. If an individual has their retirement savings connected to a business and there is a delay in selling or an individual is not sure about how to obtain the full amount from a business, retirement could be postponed or sometimes not even possible. A buyers/sellers agreement or business succession plan can prove to be particularly important for baby boomers who are interested in retiring. For individuals who are interested in retiring sometime soon, it is often a wise idea to consult with an experienced estate planning attorney and develop a buyers/sellers agreement.
WAYS IN WHICH A BUY/SELL AGREEMENT MIGHT BE HELPFUL
There are several unique advantages which include the following:
Contain Terms for How the Business Can Be Bought Or Sold at a Later Date. Listing absolute terms about how a business can be bought or sold in the future is not often considered by individuals who are purchasing a business. By crafting clear terms about how this type of transition might occur, this transition can be made much smoother. Some of the common elements included in regards to this subject might include when shares of the business can be sold, who is eligible to purchase the shares, and how shares of the company can be bought.
Details About How Family Relationships Might Impact a Business. Buyer-seller agreements can contain details about how family dynamics attached to the business will occur. For example, a buy-sell agreement might contain a clear description of the interest that a business owner’s relatives have in a company. In addition to family members, buyer-seller agreements can also describe what impact events like bankruptcy, death, incapacity, or marriage will have on the business.
Dispute Resolution Terms. Buyer-seller agreements can resolve business disputes that can arise for numerous reasons including ownership of the company. One common element of business agreements contains a term that business disputes will be kept confidential.
A good operating agreement should contain a solid buyers-sellers agreement.
Tax Issues. Buyer-seller agreements often provide various details about the impact that taxes might have on the business. For business owners, this agreement can contain provisions about the valuation of the company as well as estate tax issues.
Valuation. Buy-sell agreements can require that shares in a business be either evaluated annually or at the time that succession-related issues occur. In addition to valuation, buyer-seller agreements can also help with the closely related issue of success and can contain requirements that buyer-seller agreements not be transferred to particular individuals.
REASONS TO CONTACT A COLORADO ESTATE PLANNING ATTORNEY
Having a strong buyer-seller agreement can significantly facilitate one’s transition into retirement. These agreements can help guarantee that a business owner’s vision will be carried forth in a company.