Ever heard of a “pre-nuptial agreement?” I’m sure that you have and that you know that a “pre-nup” is a contract signed by two people before they get married and that will control how they divide up their property if they decide to get divorced. Well, a buy/sell agreement for business partners is similar to a “pre-nup” for married partners. A well-drafted buy/sell agreement will deal with issues about the business in certain unpredictable situations like the death or disability of a partner, and even the dissolution of the business.
If you are in business with someone else a buy/sell agreement or business succession plan is critical to the future survival and success of your company. If a partner suddenly dies, the buy/sell agreement will direct how the surviving spouse is “bought out” of his or her interest in the business in a fair and organized manner. Without a buy/sell agreement in place, an owner can literally end up “in business” with the surviving spouse of his or her deceased business partner (it’s true – we’ve seen it happen to other business owners who didn’t have a succession plan in place!).
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