Buy-Sell Agreements

Bryan-College Station-Conroe Buy-Sell Agreement Attorneys

At the inception of a business it is important to work with a legal advisor who can help develop strategies for dealing with matters down the line, should they arise. One such strategy that is recommended for nearly any small business is the establishing of a buy-sell agreement. In essence, such an agreement delineates how and when an owner’s interest in the business can be sold. A Texas business attorney with our firm will help you develop a buy-sell agreement that not only sets clear guidelines for selling interest, but also protect your investment.

Why a Buy-Sell Agreement Is So Important

If the need for a buy-sell agreement is not immediately clear, consider how a divorce can affect a partnership. The interest that one partner has in the business will be considered community property; as such, the spouse of the partner may gain a percentage of ownership in the company, even if they had heretofore had no voice in how the business was run. A buy-sell agreement that is carefully worked out will take such a possibility into account and dictate that the business interest of the partner be sold.

Another illustration of how a buy-sell agreement can be useful is a situation in which one owner is terminated. It would not be healthy for the company if that individual continued to possess interest in it. A further example is when one partner becomes incapacitated and cannot continue to assist in the business’ operation. A small business may not be able to afford to continue compensating this individual; moreover, he may wish to sell his interest in the business in order to help pay medical costs. A Texas business attorney will help you create a strong and effective buy-sell agreement that takes these kinds of matters into consideration.

Factors to Consider when Creating a Buy-Sell Agreement

The terms of a buy-sell agreement must be accepted by all owners in the business. It is best in most cases to have these terms worked out in negotiations between the owners, and with the input of a knowledgeable Texas business attorney. Among the most important factors that need to be considered in any buy-sell agreement are:

  • Tax objectives and considerations
  • The need for liquidity
  • Estate planning
  • Sale of ownership interest
  • How value will be determined
  • Orderly disposition

Note that buy-sell agreements are to some degree subjective, meaning that the needs and purposes of owners in one business may differ significantly from those in another. That said, the one unifying element is that a buy-sell agreement is vital to the development and maintenance of a healthy business.

For Assistance or Questions

If you have questions about the terms of a buy-sell agreement, or need legal assistance, a Texas business attorney at Peterson Law Group can provide you with professional and knowledgeable guidance. Call us to set up a consultation today at 979-703-7014 or 936-337-4681.