https://www.youtube.com/watch?v=-2OYfn9u2g0

Locking in your exit strategy with a buy-sell agreement can create great certainty.  The reason is that it will accommodate the continuity of your company in the broadest range of circumstances. Planning for your continuation when you or your co-owners exit is critical.  It could mean the difference between ownership transition becoming the capstone of your success or a slippery slope to financial demise.

Table of contentsBusiness Prenup: Ownership and Control When a Co-Owner ExitsWhat If You Don’t Have an Exit Strategy?Tools and Ideas to Plan Your Exit StrategyWhere A Buy-Sell Agreement Fits into the Cash Flow SystemWhy Should I Plan for How I’ll Exit?OptionsCertainty and Peace of MindFair BargainingWhat Circumstances Should I Consider?What Are Buy-Sell Agreements?Do I Need a Buy-Sell Agreement?What Are the Options to Fund Buy-Sell Agreements?CashSinking FundA LoanInstallment PaymentsLife InsuranceHow Can A Life Insurance Policy Solve Buy-Sell Funding Problems?Stock RedemptionCross-PurchaseLLC Buy-SellBuy-Sell Agreements: How to Get StartedMultitasking Life Insurance to Indemnify Multiple

Threats at OnceAdditional ConsiderationsBuy-Sell Agreements and Infinite BankingGetting Started with Buy-Sell Agreements

Business Prenup: Ownership and Control When a Co-Owner Exits

If you're in business with others, you may wonder what would happen if something happened to them, or you. What about when or if one of you wants to leave, retires, becomes disabled or physically or mentally unable to continue, or passes away unexpectedly? 

We’ve talked about how you can compensate for losing key employees or owners with Key Man Insurance, but what about the ownership interests?

Maybe you’re the sole business owner at this point, but you hope to sell someday.  If your company is built on your reputation, knowledge, and expertise, would a strategic handoff be better than an abrupt ownership change?  Perhaps it would be better to hire well as a transition strategy.  You might be able to transfer ownership slowly over several years, giving your client base time to build a relationship with the new guy.

What If You Don’t Have an Exit Strategy?

If you share the ownership of a company, your livelihood rests on its success.  How do you make sure your family members prosper, no matter what happens to you or your co-owners?

Contingency planning is one of those things that so many people put off because it’s not an immediate concern.  According to LIMRA, in 2015, 75% of US small businesses have not had their market value assessed by a business valuation expert, and 64% of US small companies don’t have a business continuation plan.

Planning for how you sell or transition can mean the difference between peace of mind or turmoil.  When your business operations continue after losing an owner without missing a beat, you and your family will continue experiencing the financial rewards of everything you’ve built. 

If the company struggles and suffers, it could mean the inability to fulfill contracts, unhappy clients, and dried up revenue.  And this could cause financial strife for you and your family. 

It’s worth thinking this through and planning for contingencies to fully experience the fruit of your labor, no matter when or how you or your business partners exit.

Tools and Ideas to Plan Your Exit Strategy

In today’s show, we discuss the buy-sell agreement – what it is, what it does, and how it works. 

We'll answer:

Why should I plan for how I’ll exit my business? Planning for how you’ll exit your business allows for the orderly transfer of the ownership interest when a business partner leaves the company.Why should I plan for how I’ll exit my business? Planning for how you’ll exit your business allows for the orderly transfer of the ownership interest when a business partner leaves the company.What circumstances should I consider in setting up a buy-sell agreemen...