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Advantages of Having a Buy Sell Agreement Thumbnail

Advantages of Having a Buy Sell Agreement

My experience in working with business owners have led to the following when it comes to buy-sell agreements. Most don’t have one and even if they do it’s not funded. I compare it to personal will and trusts. Most say that “they’ve been meaning to get that done,” and they know it’s important to get done. 

The purpose of a buy-sell agreement in its simplest terms is to have a document that makes either the other owners or the employees whole if one owner has to leave the business.

A fully funded buy-sell agreement provides many advantages to a retiring or disabled owner, or the family of a deceased owner. 

4 advantages to the retiring or disabled owner are:

1.      Guaranteeing a purchaser for the business interest

2.      Assuring a fair price for the business interest

3.      Turning an illiquid asset into a liquid asset to help fund retirement

4.      Providing an income producing asset which isn’t dependent on future success of the business.

4 Advantages to the remaining or surviving owners are:

1.      Establishing triggering event to guarantee a sale at an agreed-upon price

2.      Permitting uninterrupted operation of the business

3.      Maintaining harmony and control with interference from the deceased owner’s family or a disabled owner

4.      Providing the funds necessary to purchase the business interest

Ryan Burklo is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 3585 Maple St #140, Ventura, CA 909-399-1100. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Quantified Financial Partners is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2019-78526 Exp 4/21