Michigan Buy-Sell Agreements

As a business owner your time is often overwhelmed with the day-to-day work required to run your business. You knew you needed to form a limited liability company or a company with your fellow owners and you did that. So what is this thing you heard about needing to plan past the formation of your business? What is a buy-sell agreement?

What is a Buy-Sell Agreement?

The simple answer is a buy-sell agreement is an agreement between the owners of a business that controls what is going to happen if one of the owners leaves the business. Leaving the business might be by choice (wanting to sell your share of the business to someone else) or by circumstance (one of the owners suddenly passes away).
When you and your fellow owners started your business you went in with the intent that you were going to work with those individuals. You did not go in with the intent that they could sell their share to some stranger or pass their share of the business to their children or grandchildren. A buy-sell agreement helps you take control over those types of situations.

We Already Have a Buy-Sell Agreement.

It is great if you already have a buy-sell agreement in place. But the first question that needs to be answered is “Have you funded the buy-sell agreement?” Most businesses fail to fund their buy-sell agreement and then when something comes up, they are not prepared and the buy-sell agreement doesn’t do much to help.
The second question is “When was the last time you updated your buy-sell agreement?” Circumstances change. The value of your business increases. New owners come on board. We start to plan for retirement. And so much more. Your buy-sell agreement from even five years ago may not be what you need today.

Is There Anything Else to Consider with a Buy-Sell Agreement?

A buy-sell agreement is only half the battle. Even after the plan is in place. Even after the buy-sell agreement is funded. You still need to plan for your own personal estate. Think about the plan you put in place for if you were to suddenly pass away. You planned for the business to pay your estate for your share of the business. That is very likely a significant amount of money that is going to your estate. If you have not put together an estate plan or your plan does not consider the impact the buy-sell agreement will have on your estate, your beneficiaries might not get the maximum benefits of your planning
The Business Law Group has helped a great number of clients ensure that their businesses operate as they plan them to. This includes making sure that ownership and management of the business is not only stable but there is a carefully drafted plan in place if a change in ownership was to come up unexpectedly. We also don’t leave it to chance for your plan to come full circle. We make sure that your personal estate matches up with your business’ plan too.
Call The Business Law Group at (616) 528-0007 or visit our Contact Page to set up a free consultation with one of our Buy-Sell Agreement attorneys today.