How to Prepare a Buy-Sell Agreement



Selling Your Business | Sba.Gov

If you decide that selling your business is the right exit strategy for you, be sure that you cover all your bases. In order to sell your business officially, you will need to prepare a sales agreement. This is the key document in buying the business assets or stock of a corporation. It is important to make sure the agreement is accurate and contains all the terms of the purchase. It would be a good idea to have an attorney review this document. It is in this agreement that you should define everything that you intend to purchase of the business, assets, customer lists, intellectual property and goodwill.

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Buy-Sell Agreement Faq

Every co-owned business needs a buy-sell, or buyout agreement the moment the business is formed or as soon after that as possible. A buy-sell, or buyout agreement, protects business owners when a co-owner wants to leave the company (and protects the owner who's leaving). If a co-owner wants out of the business, wants to retire, wants to sell his shares to someone else, goes through a divorce, or passes away, a buyout agreement acts as a sort of "premarital agreement" to protect everyone's interests, setting the price and terms for a buyout. Every day that value is added to a business without a plan for future transition, it increases the owners' financial risk. Nolo's Business Buyout Agreements book can help you when you're ready to put a plan into place.

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Buy-Sell Agreement Overview

One of the primary functions of a buy-sell agreement is to reflect transactions and define and protect the rights of a client. These agreements also facilitate ownership transition of a business. Your San Diego attorney will draw up a buy-sell agreement following contract law and drafting principles. A buy-sell agreement will maintain normal proceedings within your business and allow for an orderly transition if you decide or are forced to make a sale. Your San Diego business lawyer will make sure your buy-sell agreement includes important content, such as clauses explaining when the business can be sold, who can buy it, and how the sale price will be determined.

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Buy-Sell Agreement: Attracting Investors

A buy-sell agreement can be especially helpful in seeking investors for your business. Many investors will only consider options that include a buy-sell agreement with company management, as this gives them an opportunity to pull investments from an enterprise that does not meet their expectations. Your San Diego business lawyer will ensure investors are protected by the buy-sell agreement, structuring it to allow them to pull their investment if a company is performing poorly, or purchase enough shares to remove the current management, or sell the company to new owners.

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