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Buy-Sell Agreements

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  •  Executive Benefits
  •  Human Resources

  • In today’s increasingly complex business environment, employing human capital can be overwhelming to keep up with for companies of every size. BCG works with companies with just a few employees to organizations with thousands of employees.

  •  Life Insurance and Disability

  • Buy-Sell Agreements For Business Succession and Continuation
    While there are a number of strategies for ensuring an orderly, tax-efficient transfer of ownership of your business at the time of your retirement, disability or death, a comprehensive Buy-Sell Agreement should be at the top of your list.

    You’ve worked hard to build your business and it very likely represents a large portion of your net worth. If you have not already prepared a Buy-Sell Agreement to protect all that you’ve worked for, you should not wait another minute. Here are a few questions to ask yourself that will reinforce why you should take action today:
    • Do you have children or family members willing to take over the business?
    • Do any of your heirs have the experience necessary to run your business?
    • Do your partner’s family members have the knowledge and commitment to join the business?
    • Would you want your partners’ family as business partners?
    • How would the company afford to survive if you or a key partner were disabled or died?
    • Would your heirs or partners be forced to sell the business to pay your estate and taxes?
    • Is your business and estate planning structured to reduce or eliminate various taxes?
    • Will your heirs or those of your partners get a fair price when it comes time for a buy-out?
    Partnerships Can Utilize Unique Business Protection:
    Cross-Purchase Buy-Sell Agreements

    Without a formal, written Buy-Sell Agreement, if an owner were to die, unhappy consequences may result:
    • Conflicts and possibly even litigation between the deceased owner’s heirs and the surviving owners
    • Delays in the transition to successor ownership and in settling the deceased owner’s estate
    • Potential loss of customers, key employees and creditor confidence that damage the business
    During a cross-purchase type of Buy-Sell Agreement, each individual business owner agrees to buy a portion of the deceased owner’s interest. The Buy-Sell Agreement obligates one individual to purchase a deceased business owner’s interest at a particular price, and another individual, the deceased owner’s estate or heirs, to sell the interest at the specified price.
    A Buy-Sell Agreement gives business owners exact information about who will purchase a deceased owner’s interest, what the price will be, when the sale will take place and where the funds will come from. The purchase price is either specified as a certain, fixed amount or the agreement includes a formula to determine the price.

    A cross-purchase buyout is funded when each owner purchases a life insurance policy to cover the life of every other owner. The total amount of insurance estimates the purchase price for the insured’s share of the business.

    Show Example

    These are just a few of the scenarios that could take place resulting in financial hardship for or even force the liquidation of the business. Fortunately, there is a solution: A well-crafted Buy-Sell Agreement.

    A Buy-Sell Agreement Is a Legal Contract
    In the process of preparing the contract, the owner or owners of the business contemplate as many potential scenarios as possible that could negatively or positively impact the succession or continuation of their business including:
    • Death of Owner or Partner(s)
    • Disability of Owner or Partner(s)
    • Separation or Divorce of Owner or Partner(s)
    • Retirement of Owner or Partner(s)
    At the loss of an owner, a comprehensive Buy-Sell Agreement ensures that the business interest would be transferred according to the terms of this contract. The other owner(s) would be obligated to purchase the deceased's business interest and the deceased's heirs would be obligated to sell.
    • Business Valuation
    • Buy-Sell Planning
    • Buy-Sell Restrictions
    • First Right of Refusal
    • Purchase Funding Options
    • Insured Disability Buy-Sell Plan
    • Business Liquidation Insurance


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