“Business divorce” is an apt term for the often messy and tumultuous ways in which a closely held business can undergo a momentous change. Just as with a marriage, small business breakups are often emotional and disruptive since they create rifts in once-steadfast relationships. No one starting up a business wants to contemplate its breakup, but it is advisable to take precautions nonetheless. One positive action is to enter a buy-sell agreement.
Continuing the analogy to marriage, a buy-sell agreement is like a prenuptial agreement. It can provide a methodology for how owners’ shares may be valued and reassigned if any owner leaves the business, either voluntarily or otherwise. It can also place restrictions on what actions can be taken with regard to the departing owner’s interests. Once signed, the agreement can be stored away until needed.
A buy-sell agreement can avoid an unpleasant breakup by providing for the following:
The main objective of a buy-sell agreement should be to carry out a change of ownership with the lowest possible interruption of business operations. An experienced business divorce attorney can help you put a well-structured agreement in place, one that includes provisions anticipating a wide range potential contingencies.
H. Clay Parker, Esq. advises Central Florida clients on a full range of contract matters, including employment contracts. Please call 407-216-2504 or contact us online to schedule an appointment at our Orlando office.