When the ownership of a business changes hands, it can be a dream come true for both the buyer and the seller. Founding and cultivating a business to the point where someone wants to buy it is a mark of successful entrepreneurship. After the sale, the sellers can establish a new business or perhaps even retire. Meanwhile, the buyers benefit from starting their business project with a company that is already flourishing; they do not have to start from zero, and they can benefit from the lessons the previous owners had to learn through trial and error. Of course, when the process of selling a business does not go smoothly, it can be a legal and financial nightmare for both parties. Drafting a buy-sell agreement in a way that clearly spells out the rights and obligations of the buyer and the seller can help you prevent these problems. You should have a business attorney write your buy-sell agreement. Contact Stephen Welle to help write an agreement or to review an agreement provided by the other party before you sign it.
How to Write a Buy-Sell Agreement for a Business
A buy-sell agreement for a business should include the following information.
- The business entity designation, such as corporation or limited liability company (LLC)
- The names of the parties to the agreement, whether they are individuals or businesses. Make sure to use the correct spellings of the parties’ legal names and to specify which party is the buyer and which is the seller.
- If the business has several owners before or after the transfer of ownership, specify the percentage of ownership for each owner.
- The requirements for transferring ownership of the business. For example, a partial owner might be required to give notice a certain amount of time in advance before selling her share of the business. The agreement should also specify the procedures the other owners must take to stop the transfer of ownership in the event that they object to it.
- Instructions for calculating the amount the buyer will need to pay to buy his share of the business.
Planning in Advance Will Save You a Lot of Trouble
The best time to write a buy-sell agreement is when you establish the business, not right before you plan to sell it. In the text of the agreement, specify what will happen if one of the owners retires, dies, becomes disabled, or chooses to sell his or her share of the company. A business contract lawyer is the best person to help you understand all the possible scenarios for which you must provide in the agreement.
Contact O’Keeffe O’Brien Lyson Attorneys About Buy-Sell Agreements for Businesses
An effective buy-sell agreement for a business can help prevent legal disputes and can ensure a smooth transition of ownership. These agreements require the expertise of a business contract attorney like Steve Welle. Contact O’Keeffe O’Brien Lyson Attorneys in Fargo, North Dakota to discuss your case or call 701-235-8000 or 877-235-8002.