Do I need a Buy-Sell Agreement?

For the small business owner who does not plan to pass down the business to the next generation, it is imperative to consider what will happen to your business upon your death or permanent incapacity. All too often, surviving family members end up with far less than what the business was worth when plans were not made ahead of time that prevent such a result. One option is to enter into a Buy-Sell agreement. A Buy-Sell agreementguarantees the fair market value of your interest in the business in the event that the business must be sold at a later date. In essence, a Buy-Sell agreement is a binding agreement between you and someone who agrees to purchase your interest in the business in the future for a pre-determined price or using a fixed method of determining the fair market value at the time of the sale.  This prevents a buyer from taking advantage of your grieving loved ones, leaving them forced to sell your interest at a steep discount.