Buyouts and Business Succession Planning

Buy sell agreements and buyouts are crucial for every closely held business and business with more than one owner.

• Problem: one technique for buy sell agreements is to make a certificate of stated values, but sometimes this happens once every twenty years. Make sure it happens more often.
• Make sure you have plans for the spouse in the event of a divorce.

  a. Many couples sign a prenup that addresses the business.

  b. Have the spouse sign the bottom of the shareholder’s agreement, to show she acknowledges what will happen in the event of divorce or death.

• In order to have a buyout agreement accepted by the service, you need to follow certain criteria including:

  a. Fixed and determinable price.

  b. Must be a bonafide business arrangement (document the reasonableness of it).