Buy-Sell Agreements Resource
Is your business in need of a buy-sell agreement? Don't know how to get started?
An excellent resource worth considering is a book from Z. Christopher Mercer called Buy-Sell Agreements: Ticking Time Bombs or Reasonable Solutions? A blog post from Mercer worth reading also raises an excellent point regarding buy-sell agreements:
If you are in the process of creating a buy-sell agreement, be sure that the document actually reflects the agreement of the parties to the critical business and valuation issues that relate to the particular situation. If you have an existing buy sell agreement, review it to insure that it reflects agreement of the parties on key business and valuation issues that currently pertain to your situation (and not to the situation fifteen years ago when you first signed it!). In both cases, be sure through review by competent legal counsel, that the agreement appropriately considers legal issues that pertain to your situation.
Seems like common sense but I recently learned of a situation where two owners had drafted their own agreement. (Kudos for at least recognizing the need for it). The owners agreed upon a valuation. The problem that arose is that neither owner really understood the valuation they had agreed upon and as their business progressed the valuation did not reflect the realities of their business. The failure to review and implement an agreement with competent counsel has now resulted in litigation.
It's also wise to get advice from an accountant or other business valuation expert when creating the buy-sell agreement. A team approach is often very helpful.
I have seen many articles on the Internet which state that you absolutely need to form a limited liability company (LLC) if you are a small business owner. The S corporation, once the darling of small business entities, must now feel like the red-headed step child.