The failure to have an agreement in place regarding appropriate business succession and buyouts is a big mistake and can be detrimental to any business. Business owners often neglect to plan for the future, but planning early can save the headache and expense of sorting these issues out later on. Some of the potential circumstances you may want to plan for are:
- The retirement of a partner or owner.
- Inheritance of the business (or part of it) by heirs who are not willing, suitable or desirable to be operating the business.
- Disability of a partner or owner.
- The divorce or remarriage of a partner or owner.
- The passing or withdrawal of a key person or partner from the business.
Planning typically includes a basic buy-sell agreement, ways to fund the agreement, and, lastly, methods of valuing your business and dealing with departure.