Reasons Why A Real Sale Agreement Is Important For Small Businesses

Reasons Why A Real Sale Agreement Is Important For Small Businesses

If you can just imagine for a moment that you are currently in business and you will have a partner, to ensure the both you may manage the company successfully. This business is performing well, you operate it in accordance with all the local laws and regulations, pay your taxes promptly, causing a strong presence in your community which views your establishment like a solid economic unit. Next believe that your company partner has to go through some very negative personal experience like a divorce, a major illness, or he may need to declare personal bankruptcy.


How would this affect your business such circumstance? In the matter of a divorce, would his ex-spouse be a partner in the commercial, of course, if so, how could she be able to last her end of your partnership if she had no knowledge or talent in the commercial? Or would the courts rule that his share from the business receive to one of his children? Have you considered your partner’s death, disability or early retirement due to illness? Would the business be worth less money? Or will you be the sole owner of your business?


They are questions that should be faced along with the answers determined beforehand, and in case the situations do occur they outcomes are addressed in the valid buy then sell agreement. Basically, this sort of agreement will handle every situation possible in terms of the result and also the final disposition from the business. In case a buy and then sell agreement is at place when most of these situations occur, the agreement will decide what legally may happen towards the business.


Every business that has several individuals the level of ownership needs such an agreement, otherwise the other owner or owners will more than likely be confronted with the difficult proven fact that relatives of your displace owner will suddenly become owners and partners of the business. This is not necessarily an excellent situation because of their potential lack of ability and inexperience and potentially their lack of ability to carry their share in the load.


In the matter of death or disability, the problem is easily solved by life and disability insurance which induces the sale of your deceased or disabled partner’s share through the estate or family in exchange for the proceeds of the insurance. Then the remaining partners own the company outright and the heirs have enough cash, or price of the company.


When it comes to a divorce, it may be stated within the terms of the agreement how the business will buy out your affected partner’s interest with the installment agreement over a period of time. It might be easy to insure that eventuality too, using a Lloyds of London kind of insurance. There may be an alternative stated inside the buy and sell agreement where the remaining business people or business proprietor, as the case could be, could choose to add the spouse or another relatives, in the event that makes sound business sense.


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