Perhaps one of the more complex aspects of owning a business, yet one that is frequently overlooked, is succession planning, that is transferring a business to another person after the disability, death or departure of one of the owners. If there is no agreement in place prior to the occurrence of one of these events, the ownership of the business could be subjected to a whole host of personal and legal battles, or the value of the business could be materially impaired. This is why a buy/sell agreement is so important.
Buy/sell agreements establish what will happen to a person’s ownership interest in a business after that person has died or has left the business. If you own a fractional interest in a business that generates a substantial amount of revenue, a buy/sell agreement is a necessity.