Archives for December 2020

What happens to a company when one owner becomes disabled? For example, a company may have a buy-sell agreement that covers the death of an owner, but fails to adequately address the cash flow implications of a lifetime event (divorce, disability, bankruptcy or retirement of a shareholder). Few owners (or their advisors) give much thought or analysis to the likelihood of a lifetime transfer. Instead they focus all of their attention on dealing with the least likely event—an owner’s death. Yet, in our experience, lifetime transfers occur much more frequently, and when they do can cause huge problems. Typically, owners create buy-sell agreements that may work well in the event of a shareholder’s death, but forget that the same provisions (such as a first right of refusal at a pre-determined price should one owner wish to transfer ownership to anyone) will govern in the case of a lifetime transfer. Because these agreements are designed for one event and used for another, the result … [Read more...] about Buy-Sell Agreements – Your Business Will