The lawyers at Stark & Stark continue to produce helpful information on their law blog for clients and lawyers alike.  The latest article worth reading is from Stuart Mickleberg the Buy-Sell Agreements in Closely Held Business.  Stuart says a good Buy-Sell Agreement should accomplish at least four important objectives:

  1. Providing mechanism for the orderly transfer of the business;
  2. Establishing a valuation mechanism which avoids disputes between owners as well as possible disputes with the Internal Revenue Service;
  3. Reducing possible disputes between owners, an owner’s heirs, and possible unwanted business partners to whom an ownership interest in the company may otherwise be transferred; and
  4. Providing financial security to a deceased or disabled owner’s family.

As I have indicated in the past, the formation of an Iowa business should include a Buy-Sell Agreement.  Unfortunately it is an agreement that is often neglected by business people because they want to save on initial start-up costs.  As my friend Imke Ratschko says, "Buy-Sell Agreements are like prenuptial agreements for people in business… As with prenuptial agreements, people tend to overlook their importance or simply don’t want to deal with the subject; after all, they are in love!"

But the time to enter into a buy-sell agreement is at the beginning of the business relationship when everyone is excited and getting along. It is often very difficult to negotiate a deal when something has gone wrong.  Without a buy-sell agreement, owners may end up in court and the business may suffer.