What is a buy-sell agreement? A buy-sell agreement is a legal document that controls when and how owners can sell their interests in the business. It also serves as a valuation of the business. This document spells out what will occur if one of the owners of the business is disabled, dies or must leave the practice. Without a buy-sell agreement in place, business owners are taking the risk of having the business disrupted, which could cause a decrease in its value. Worse yet, you may become embroiled in a dispute over the practice value or how to buy out an inheriting party.
Every co-owned business needs to have a buy-sell agreement. Statistically almost three out of four business owners do not have a succession plan in writing. This represents a lot of potential for chaos for companies. How can a practice be affected? Ask yourself these questions: Is your business partner’s spouse qualified to help you run your practice? How would you feel if your business partner filed for personal bankruptcy and the bank suddenly owned a part of your business? Buy-sell agreements are designed to mitigate risks such as those described above.
It is wise to involve your lawyer, accountant and possibly an outside valuation professional when establishing a buy-sell agreement. Once the agreement is finalized, MDA Insurance has funding solutions for it. We have knowledgeable account executives who can assist you in finding the products that will protect everyone in the event of a death or disability. The MDA offers products designed specifically for buy-sell agreements and a free, no-obligation review of your buy-sell agreement. Without the proper funding, a buy-sell agreement is just an expensive piece of paper.
Please contact Shawn Haindel of MDA Insurance at 800-860-2272, ext. 442, for further information.