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Business Solutions

An evaluation of a business quite often wrongly focuses on financial statements of the business. Unfortunately, a purchaser does not take into account the sentimental value of the business. Nonetheless, as a business owner, it is imperative to find ways of protecting assets in the event of death, disability, or retirement of the principal owner or shareholders of your company.

Understanding Buy-Sell Agreements:

A Corporate Buy-Sell Agreement is a legal document protecting the rights of 2 or more shareholders of a business. The document deals with a number of contingencies:

• dissolution of the business
• death of a shareholder
• disability of a shareholder
• retirement of a shareholder
• disputes among shareholders
• rules and procedures on voting issues

Most businesses, that survive the first 5-years, have a tendency to show significant growth. The Buy-Sell agreement issue must be addressed at the earliest possible moment through the business development process.

It is alarming to note that 80% of operating businesses either do not have a legal document in place or, if one exists, than the document is outdated and no longer reflects the true intentions of the owners. The repercussions for not having a buy-sell arrangement in place could be severe.

Buy-sell Agreements to avoid:

• The mental anguish while making the decision to go into business for yourself
• The negotiation for bank loans to invest in your business
• Writing the cheque from your bank account depleting savings to invest in your business
• committing yourself to a payroll, rent and leases
• The number of relentless hours trying to secure some revenue to meet your monthly obligations
• The dilemma of taking whatever little profit you may have enjoyed during the early years and reinvesting it in your business
• The sacrifices that your family and you had to make during the startup years