A well drafted buy-sell agreement for a business in Oklahoma is critical for transferring business assets. As a business owner, you know there are multiple ways to enter contracts with other business owners. You do it everyday as you run your business. You may be looking to outsource your payroll or find an induvial to deal with shipping products for you. Or you may be contracting with tax professionals or the other important the million other things you’ve done to create a great business. On the other hand, you may be looking to sell your entire business to another company so you can retire as part of you estate planning or start another business venture.
A buy-sell agreement helps to define the roles and potential scenarios if you want to sell your business or buy into another individual’s business. These agreements can help prevent lots of issues before they even start.
What Is A Buy-Sell Agreement For a Business?
A buy-sell agreement may also be referred to as a buyout or shareholder agreement. These are legally binding documents between two or more business partners who decide on specific terms of how the business will operate if one of the partners leaves the business unexpectedly. A buy-sell agreement is essential for small business owners to help safeguard the company and the assets they have built up.
Usually, a series of agreed-upon events would trigger a buy-sell agreement. These events may include employment termination or resignation from the company, as well as retirement, divorce, bankruptcy, death, or permanent disability. A good buy-sell agreement will spell out what happens with the share of the business owned by the leaving partner in each situation and how the business will continue.
How Does It Work?
The buy-sell agreement puts together a process that the company must follow to protect its longevity if a vital member of the team leaves. All partners agree upon this severance process before anyone plans to go so that everyone has equal input and the ability to request changes if they are unhappy with the process.
A buy-sell agreement will define which events trigger a buyout. A buyout is when the company or the other partners must pay the leaving partner for their share of the business. When the partners know what events will trigger this, they can further determine who has the right to make the purchase.
In closely held corporations and professional businesses, there is a likelihood that only specific individuals have the right to buy out the individual share. Once the purchasers are determined, the price and how the purchase price is to be paid will also be laid out in the agreement. If any additional types of insurance must be purchased, the business or the partners can purchase the insurance and see that it follows the guidelines in the agreement.
Finally, the agreement is in place once all the terms are agreed upon. If a partner or integral employee decides to leave the company, they must give the proper notice, which triggers the agreement to start. Once the agreement is in motion, the partners must follow it to ensure the parties and the business are all treated fairly. Having terms that spell things out enhances the business value making business commerce move in an orderly fashion.
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Tulsa Oklahoma Business Attorneys in Your Corner
Our Tulsa business attorneys at Kania Law Office are well-versed in writing and interpreting buy-sell agreements. From estate planning to business From probate and estate planning to complex civil litigation our team in in your corner. If you are stuck trying to figure out the best way to create an agreement or what specific terms mean in an agreement, we can help. To schedule a consultation, call our offices at 918-743-2233 or visit us online.