This document can be used when a company, through its owners, wishes to enter into a formal written agreement on how and whether the owners can sell their ownership shares. It is likely that this document will be kept both by the company itself and by the individual owners in order to have a record of what has been agreed. Buy-sell agreements protect your business from future problems by consolidating what happens if an owner wants or needs to sell their portion of the business. This agreement describes who can buy an owner`s interest, what the price will be, and what will happen to an owner`s portion of the business if it dies, is disabled, retires, goes bankrupt or divorces. If you do not have a buy-sell agreement in any of the circumstances mentioned above, your business could be subject to division by sale. This means that a court can order the dismantling and sale of business items in order to create the financial value to which a new owner is entitled. Another jurisdiction could decide to grant ownership to a new person in one of the above circumstances, which would give that new person the same decision-making capacity as existing partners. A buy-sell agreement offers a concrete way to protect the future of your business and ensure that it lasts beyond your commitment. The model sale agreement below describes an agreement between the shareholders of ABC, Inc., regarding the purchase and sale of shares of the company. Shareholders agree to the conditions under which shares may be transferred and any restrictions on the transfer of shares.
Questions are asked about the identity of the company, as well as the type of business it is and where it is created. Then each of the names of the owners is entered. The most important thing is that this document questions different situations and how the ownership shares of the company are managed in these situations, such as. B the involuntary transfer of ownership shares, the dismissal of an employee owner, the death of an owner, the retirement of an owner or the fact that an owner wishes to sell or voluntarily transfer ownership units during his lifetime. Life insurance is a common way for many companies to plan the execution of the purchase-sale contract. In the case of several co-owners, for example, the market value of the business of the business would be estimated. Each partner would then be insured by the other owners or the company for its share of the total value of the business. In the event of the death or incapacity of an owner, the proceeds of the life insurance policy would be used by the remaining partners to purchase the shareholder`s shares, with the valuation price going to the family of the deceased owner. Each company is unique in structure. A company with multiple co-founders would have a more complicated buyout deal….